We’ve been working on the development of a new monthly measure of small business revenue for some time now, and today we are excited to share the inaugural Intuit Small Business Revenue Index with you. The Revenue Index complements Intuit’s monthly Small Business Employment Index to provide a more holistic picture of the economic health of American small businesses, based on revenue, hiring, and compensation trends.
Why does that matter, you ask? It’s simple: as Kiran Patel, GM of Intuit’s Small Business Division explains, “There are many sources of information about the activity at big companies, but very few on the activity at small businesses. Intuit is one of the few companies to have this data.” So, we’re putting all that big data to good use. In essence, we are reverse data mining for insights to help small business owners — as well as economists and the general public — better understand the ever-changing health of America’s small businesses. And not only that, we are doing it nearly in real-time, on a monthly basis.
The Employment Index, which covers the period from January 2007 through April 2012, is based on anonymized aggregated data from 80,000 small business employers, a subset of users that use Intuit Online Payroll. The month-to-month changes are seasonally adjusted.
The new Revenue Index, which covers the period from January 2005 through March 2012, is based on anonymized aggregated data from 200,000 small businesses, a subset of users that use Intuit’s QuickBooks Online financial management service.
You can find the full report at index.intuit.com, but while you’re here, we’ll share a couple of interesting tidbits from both the Employment Index and the Revenue Index.
Revenue: Changes in small business revenue by industry are consistent with broader accounts of economic activity over the last seven years.
- Small businesses in the professional, scientific, and technology fields fared the best through the economic downturn, and despite a big decline starting in late 2008, they now have revenues that exceed pre-recession levels.
- Construction sector revenue stopped growing at the beginning of 2006, began a slow decline in mid 2007, and then continued a more dramatic decline starting in mid-2008.
- Businesses in the health care and social assistance sector also saw a small decline in revenues, but only recently, starting in 2011. According to Susan Woodward, the economist who worked with Intuit to create the Intuit Small Business Indexes, “A number of factors could account for this, including a drop in coverage and spending through employer-provided health care plans. This may be partially a response to the recession, but also a more general response to the change in health care policy.”
Employment: Small business employment started growing in the fall of 2009 and continues, albeit slowly, into 2012.
- In April, there was a 0.2 percent increase in employment; that’s an annual growth rate of 2.5 percent.
- Small business hourly employees worked an average of 107.3 hours in April — a decrease of 0.14 percent, or around 8 minutes, from the revised figure of 107.4 hours in March.
- Average monthly pay for all small business employees increased to $2,680 in April — an increase of 0.11 percent, or $3, from the March revised figure of $2,677 per month. The equivalent annual wages would average about $32,200 per year, the equivalent of part-time work for many small business employees.
- There was overall employment growth in all U.S. census divisions for April, while a state breakdown shows increases in all states that the index covers except for three: Illinois, Oregon, and Pennsylvania.
Want more details about the indexes and methodology? Check out index.intuit.com for a white paper, more charts, and the full report for download.