Get Started: Secrets of success, cautious owners

SECRETS OF SUCCESS

There's no single formula behind a business that creates an above-average amount of wealth and jobs, but many companies with success on both counts tend to be private and backed by investors with deep pockets. That's the finding of a study by the Kauffman Foundation, which researches entrepreneurship, and the accounting and consulting firm Ernst & Young.

The study, which analyzed 650 companies that were finalists in Ernst & Young's Entrepreneur of the Year competition, found that 88 percent were private. They've had a median revenue growth of 33 percent, and a median 26 percent job growth since they were founded. The study found that because they are private, they have more freedom and flexibility in their operations than public companies that can be held back by short-term market pressures.

Companies that received venture capital financing have had revenue growth more than twice as high as others in the study, and they created jobs 50 percent faster than the rest. The study found that venture capitalists mentored these growing companies and helped them get access to networks of other investors and business people.

MANAGING CONSERVATIVELY

Small business owners are running their companies more conservatively, hiring fewer workers and holding back on raises for their staff, according to a survey by Insperity, a provider of human resources services.

The survey in October of 5,500 executives at small and medium-sized companies found that 26 percent were hiring, down from 40 percent in a survey taken in July. Seventy-one percent said they plan on keeping employee pay at current levels for the rest of the year, up from 58 percent in July.

The number of executives who said they are meeting or exceeding their 2013 performance plans fell to 68 percent from 72 percent.

Surveys of owners' attitude or optimism don't always jibe with how they operate, particularly when it comes to hiring. The Insperity survey was taken Oct. 8-10, in the midst of the 16-day partial shutdown of the government. That may have contributed to owners' cautious sentiments. The Labor Department's October employment report, which reflects actual hiring for much of the month, showed that companies added 212,000 jobs, more than economists expected.

LENDING SLIDE

The government shutdown in October helped cut the number of government-backed loans to small businesses for real estate and equipment purchases, according to the National Association of Development Companies. The trade association counts 480 real estate and equipment loans whose funding is being completed this month, down from 564 in October.

The shutdown, which closed the Small Business Administration, halted processing of the loans made under what's called the SBA 504 loan program.

NADCO represents nonprofit companies that are certified by the SBA to provide property loans.

ONLINE MARKETING

Business owners can get an introduction to Internet marketing from an online seminar on Thursday, Nov. 21 at 1 p.m. Eastern time. It's sponsored by SCORE, the organization that gives free counseling to small businesses. Learn more and register at http://tinyurl.com/opys3g3

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