Recently, I co-chaired a joint meeting of the Senate and House Economic Development Committees at the Capitol.  This was the first in a series of meetings to take place across the state this summer that will focus primarily on small business.  During this Small Business Initiative, state legislators will hear directly from entrepreneurs and business leaders on how to improve Georgia’s climate for small business.  There is an incredible amount of data out there suggesting that small businesses are truly the backbone of our nation’s economy.  If there are too many obstacles that exist for small businesses, especially when it comes to policy, it is a big negative for our economy.

The Facts

• There were approximately 25.8 million businesses in the U.S. in 2005, and 99.9 percent had fewer than 500 employees.
• Small businesses employ over 50 percent of the total private sector (non-farm workers).
• In the last decade, job creation in small businesses fluctuated between 60 to 80 percent.  While companies with 500 or more employees continue to shed jobs, small business continues to create new jobs.
• Small businesses produce at least 13 times as many patents per employee than larger firms.
• National statistics show 650,000 new businesses are created each year; unfortunately, only 30 percent of these businesses remain after five years.
• There are approximately 500,000 incorporated businesses in Georgia; 97 percent of these are small businesses with less than 500 employees.
• There were an estimated 29,547 new small businesses in Georgia in 2005, which is an increase of 22 percent from 2003 and significantly higher than the U.S. rate of increase (4.9 percent).
• U.S. Census data ranks Georgia #3 in the country for increase in small businesses in 2003.
• The Small Business Survival Index 2006 ranks Georgia #25 in the policy environment for entrepreneurship.
  

Now What?

Everyone seems to love entrepreneurs and small businesses, because everyone loves hearing a nice rags-to-riches story.  In addition, small businesses are a vital part of our communities, contributing goods and services to local causes and taking part in volunteer efforts.  In reality, small business owners in the U.S. can be faced with high taxes, strong regulation, red tape, piles of paperwork and many layers of government.  You’ll notice in the facts above, our state is top ten in the nation when it comes to new businesses opening their doors here.  However, chief economist of the Small Business & Entrepreneurship Council Raymond Keating has Georgia ranked 25^th in the nation in the latest Small Business Survival Index.  The Index ranks the 50 states and the District of Columbia according to some of the major government-related costs that affect investment, entrepreneurship and small business.  The Index uses several government-imposed costs to factor in its rankings, such as income taxes and capital gains tax, healthcare regulations, workers’ compensation and legal liability.  For our state’s economy to continue to flourish, we’ll need to support an environment that fosters the growth and success of entrepreneurs and small businesses.

A New Initiative

Currently, there is a great deal of ongoing discussion under the Gold Dome about tax reform in our state.  Whether it is the removal of the state income tax, local property taxes, ad valorem tax on automobiles or limitations on government taxation power, it is safe to say that tax reform is on the horizon in Georgia.  In this context, it occurred to me that the taxes paid by small business owners in our state should be closely examined and perhaps reformed in the years to come.  This was one of the motivating factors for me and my fellow legislators to organize the 2007 Small Business Initiative.

In the upcoming months, we will hear directly from entrepreneurs and business leaders on how to improve Georgia’s climate for small business.  These meetings will take place in Atlanta, Tifton, Savannah and other areas of the state.  We hope to hear as many proposals as possible during these meetings, so we can head into the 2008 legislative session with some solid ideas for new policy that will make Georgia the number one state in the U.S. for its small business climate.

As it stands today, Georgia’s pro-business environment makes it one of the most desirable places to open or expand a business venture.  Our Small Business Initiative will look to make our business climate even better, and I look forward to hearing from the many experts, entrepreneurs and business leaders who will attend these meetings.  This way, we can ensure that our state remains one of the driving forces of the U.S. economy for many generations to come.

Please feel free to contact Sen. Chip Pearson at his office in Atlanta at 404.656.9221 or by email at chip@team51.org.