VITAL STATISTICS

Small businesses think big in NH

SEACOAST VENTURES: Small business is the backbone of our economy, we are constantly reminded. How dependent are we on small businesses?

PETER FRANCESE: It's hard to overstate the importance of small businesses to New Hampshire's economy. There's a little more than 30,000 firms in New Hampshire that employ fewer than 20 people each, but they are 87 percent of all firms with employees. However, that doesn't count those small, one-person operations that have no paid employees. There's more than 100,000 of those micro-enterprises in our state, as they are often described, and they are growing at more than 3 percent per year.

SV: What qualifies a firm as a small business?

FRANCESE: My definition is any firm with fewer than 20 employees. But some economists raise the bar to 100 employees. That definition includes 98 percent of all New Hampshire business enterprises.

SV: Does the state's independent streak inspire, influence or motivate small business people and entrepreneurs?

FRANCESE: You bet it does. New Hampshire's more favorable tax treatment of business investment and income compared to other states, plus a comparatively pro-business regulatory climate, foster entrepreneurship and leads to more start-ups.

SV: Two-thirds of new employers survive at least two years and nearly half make it at least four years. Despite conventional wisdom that restaurants fail more often than firms in other sectors, these establishments survived at rates only slightly below the average, according to SBA research. What are the hurdles for new businesses and how high are they?

FRANCESE: In my experience, the highest hurdles anyone wishing to start and successfully operate a small business must clear always involve personal skills. The top reasons why a small business doesn't make it include lack of business knowledge on the part of the entrepreneur, insufficient research into the true market potential for the product or service, and the inability to properly manage employees as well as oneself.

SV: The No. 1 small-business issue is the cost and availability of health insurance, according to the National Federation of Independent Business membership survey. The research indicates insurers of small health plans have higher administrative expenses than larger group plans. Can there be one or two reforms to level the playing field or are health demands as varied as company interests?

FRANCESE: Without any doubt, the most important single thing that both our state and the nation can do to improve economic growth is to address the inability of small-business owners to obtain affordable health insurance for themselves and their workers. The easiest reform is to simply let self-employed workers join together to form a health insurance group.