U.S. small businesses got a boost from rising economy

Jim Klocke

Small businesses had much to celebrate in 2014 as all indicators continued to point to the steady rise of the U.S. economy out of the shadow of the Great Recession — led by growth in hiring and the increasingly effective use of technology to compete.

“On a macro level 2014 overall has been a good year economically for Boston and businesses in Boston,” said Jim Klocke, executive vice president of the Greater Boston Chamber of Commerce. “Growth was accelerated in the second half of the year and that is going to have a great effect across the economy.”

Third quarter 2014 numbers showed the U.S. economy up 5 percent, which is the highest growth in a long time, and has all anticipating strong numbers again for the fourth quarter of the year.

Klocke pointed to the rise in startups in Massachusetts over the past year as a strong suggestion of the growing economic strength of the state.

“It is a sign of confidence in the economy. You don’t step out on your own and start a business unless you think the economy will grow,” he said.

In Boston, Klocke singles out real estate development and technology as sectors that are driving the state’s economy.

Nationwide, 2014 can certainly be credited as a year in which the country’s small businesses solidified their place in the spotlight as a main fuel for economic growth.

The most recent ADP National Employment Report said companies in the U.S. added 208,000 workers in November — the seventh time in eight months job growth topped 200,000 — and small businesses led the way adding 101,000 jobs. Companies over 500 workers added 42,000 jobs, while medium-sized businesses with 50 to 499 employees, added 65,000 workers.

Massachusetts added 13,500 jobs in November and has seen nearly 60,000 jobs added in the year.

Nationally, the November unemployment rate was 5.8 percent, the same as in Massachusetts. Overall, the state dropped its rate from 7.1 percent in November 2013.

These numbers only reflect what Robert Nelson, director of the U.S. Small Business Administration’s Massachusetts District Office, has been stressing for a long time — namely that two-thirds of the new jobs are consistently being created by small businesses.

He called small businesses “drivers” of economic recovery both in Massachusetts and throughout the country.

The use of technology was a key trend that allowed small businesses, regardless of industry, to have such high job-growth and overall success.

At the forefront of this is more and more small businesses adopting cloud computing as a way to reduce IT infrastructure costs, but also as a way to improve business operations from increased efficiency to improved employee mobility. On the back of 2014 gains, the global market for cloud services for small- and mid-size business is expect to top $95 billion.

The past year was also a time that big data analytics solidified as a necessity for small businesses. A business tech trends study from IBM reported that 75 percent of small businesses plan to increase their investment in big data analytics over the next two years. While quickly sorting through data is undeniably critical for businesses, the rise of more affordable data analysis products has finally put them on the menu for small businesses.

For most small businesses, 2014 also solidified the thinking that “The Internet of Things” is not just for large companies anymore and is having an impact on businesses of all sizes. Easily available applications that can access data from Internet-connected devices and use that data for business goals have become critical and are helping small businesses further innovate and expand.

Though it has been a brewing reality for several years, few small businesses will move out of 2014 into the future without the absolute accepted reality that content is king and social media marketing cannot be shrugged off. Content marketing is a very useful tool for small businesses with limited advertising and media budgets. Access to millennials, 76 million strong in the U.S., is most successful through social media as reports indicate a majority use social media when making purchases online. While new social media networks will rise — such as Yik Yak or Ello or Tsu — giants such as Facebook, Twitter, Instagram and LinkedIn are not going away and will continue to propel consumer spending, with many social media stalwarts working on “buy” buttons that could generate increased business for small companies.

All the growth numbers and the trends that propelled business in 2014 are giving small businesses the confidence to expand their businesses.

A recent report, the CAN Capital Small Business Health Index, found that 58 percent of small business owners expect growth in 2015.

Klocke says Greater Boston Chamber of Commerce members — of which there are 1,500 — are optimistic but cautious. They are thrilled with the growth of 2014 but are not about to get complacent about what needs to be done to keep the economy moving forward.

“There is widespread agreement that we need this growth to continue but if anything we need even faster growth,” he said. “What we want in the long term is the unemployment rate to come way down. We want an abundance of opportunities for all those in the job market.”