Macro Economic Environment for small firms in 2008: SBA

As per Office of Advocacy, there was reduction in real gross domestic product. There was 6.3 percent drop in real GDP in the fourth quarter of 2008. There was 1.1 percent rise in GDP for the year is because of changes in GDPs components i.e., investment, consumption, net exports and government spending.

Investment
There was no improvement in investment during in 2008 which was continuing trend from 2007. During the year 2008, the real gross private domestic investment dropped 6.7 percent. The real gross private domestic investment was 5.4 during 2007. The overall investment dropped 23 percent on an annualized basis in the fourth quarter. There was growth in nonresidential investment till the second quarter of 2008. There was a decline and was 21.7 percent in the fourth quarter.

Trading
Over the past few years the exports were prioritized. The companies in US were benefited from improved quality, cheaper dollar and a renewed focus on exploring new overseas markets. There was growth in real exports by 6.2 percent for that year. There was a drop in real imports by 3.5 percent. This resulted in an improved trade deficit.

Employment
The drop in the rate of employment continued every month of 2008. There was a decline in number of nonfarm payroll workers by 3.1 million from December 2007 to December 2008. Almost 1.7 million jobs were lost in the fourth quarter of 2008.

SME Business Environment Barometer: BIS

The Department of Businesses Innovation and Skills released seventh SME Business Barometer in February of 2010 which showed SME Business conditions.

39 percent of the SME employers cite the state of the economy to be the main obstacle to success, 11 percent expect ahead of cash flow, and about 9 percent cite competition, obtaining finance and taxation. In December of 2009, getting finance was cited to be the main obstacle.

The main obstacle which is resulting in cashflow difficulties is fluctuating income. But as per the previous Barometers, high levels of working capital or of investment required by the SMEs are less probable to be mentioned as causes of cashflow difficulties.

Out of those which offer credit, 22 percent continue to have problems with late payment. 47 percent expect it to be a small problem and 30 percent have no problem. These statistics are similar to that of the previous year's Barometers. Late problem is compared as a major problem during the time of ASBS in 2007 or 2008.

About 23 percent of SME owners have done any work for a client from public sector in the past 6 months which is similar to the previous Barometers. About 74 percent of the SMEs claim that they were paid without any delay by their public sector clients. About 23 percent expressed that they were paid slowly by their public sector clients. There is an expectation of improvement in payment by public sector clients between December of 2009 and the latest Barometer.