We all know it’s a bad economy, so why pay attention to monthly economic reports? It’s a fair question, and one that a lot of small business owners wrestle with.
The truth is that monthly economic reports can be valuable to small business owners. It’s a matter of knowing what each monthly report focuses on and what information is valuable for you and your business.
I thought it would be helpful to outline some of the reports available and how each differs. Below are a few of the economic reports on which the media focuses consistently.
The Government Jobs Report
The Department Of Labor releases a number of jobs reports every month. The “United States Department of Labor Employment Situation Summary” is one many pundits care about.
This one provides the official unemployment rate and the nation’s employment gains or losses, based on answers from surveys sent to households and business establishments. It’s a good measure of where the American economy stands overall. But it is by no means the be-all, end-all indicator, particularly for small business owners, as only 40 percent of the establishment surveys come from businesses with 20 or fewer employees. The numbers reflect everything from side-business sole-proprietors to companies with tens of thousands of employees.
If your customers are all over the board in terms of size, this will show how they’re doing. But if you cater to a niche market – like businesses between 50 and 200 people, for example, you won’t have much insight into your customer base.
Challenger Job Cut Report
Challenger, Gray & Christmas brand themselves as “the original outplacement company,” so the focus of the Challenger Job Cut Report isn’t how the economy’s growing, but how many jobs companies are cutting. The June 2011 report stated U.S.-based employers announced 41,432 job cuts for the month, an 11.6 percent increase.
Why care about just the cuts and not how many jobs were added in a month? Frankly, we all need a reality check that downsizing happens, even in a good economy. Small employers aren’t required by law to announce layoffs and the Challenger report doesn’t account for them, but the majority of businesses with 100 employees are required to report layoffs. So, if your customers are corporations, paying attention to how they’re scaling up or down can give you insight into where your production may need to go. Also, if you sell to consumers, the higher this number the more likely your sales could be impacted, as your customers may not have as much income to spend with you.
ADP National Employment Report
ADP’s National Employment Report focuses on the payrolls of their customer base, which, according to their Website, includes companies of all sizes – small, medium and large. The challenge for small businesses is that their small business numbers (establishments with 1 to 49 employees) is not made up entirely of small businesses – it can include small locations of large companies. For example, a large national clothing retailer with thousands of stores would have the employment levels at each of their stores reported in the small business segment numbers, so you’ll need to take their definition of “small business” with a grain of salt.
Really, this report is useful for getting a glimpse at what’s going on with bigger businesses.
Our report at SurePayroll, the SurePayroll Small Business Scorecard, analyzes payroll data from 33,000 small business customers. Our average customer has 7 employees. While our monthly economic report won’t provide insight into medium or large companies or the government sector, it’s a good barometer for small businesses. It shows what’s happening on Main Street.
The Scorecard also includes economic data for 35 U.S. metro areas’ small business. Want to know how Atlanta’s small business economy compares to Chicago’s? You can easily see year-to-date employee and paycheck size info for both cities from one Webpage.
I realize there are dozens of other reports out there. And they all make great fodder for the business talk shows to fill air time. However, at the end of the day, the only ones that matter to you are the ones that are relevant to your personal and business situation. When you’re your own boss, you’re also your own strategy department. Knowing which data is most relevant for you from the various reports out there can help you make the right strategic decisions about your future prospects.
MICHAEL ALTER is president of SurePayroll, America’s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University. @michaelalter