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Small Firms in New York Face Big Challenges, Survey Reveals

March 29, 2002

Small businesses bearing a critical role to the regional economies of upstate New York must overcome several barriers to growth if they are to enjoy future success, suggests a report by the Buffalo Branch of the Federal Reserve Bank of New York.

Conducted in partnership with the Center for Governmental Research, a non-profit organization based in Rochester, N.Y., Small Business: Big Challenge — A Survey of Small Firms in Upstate New York identifies the chief barriers to growth of more than 4,000 small businesses in western and central New York State. The survey also spells out the ways new technologies have impacted the region's small firms, more than one-third of which were reported to have expanded in the last three years.

Of the barriers cited in the survey, the cost of health care was determined to be the biggest concern. Sixty-three percent of respondents said health insurance premiums were significant, a finding not uncommon to small firms nationwide. At 49 percent, workers' compensation costs accounted for the second largest concern, and other barriers, including energy costs, taxes and finding qualified employees, rounded out the top concerns named by the region's small businesses.

Additional survey findings are:

  • Fifty-four percent of respondents said they recently had made a significant investment in technology. 
  • Manufacturing firms were the most likely to have invested in technology, with 65 percent of the surveyed companies in this sector indicating they had done so.
  • Of those companies having made recent investments in technology, 2 percent reported a likely loss of jobs compared to a third which said the result would be an increase in employment.
  • Almost half of the responding firms said they were on the Internet, and 73 percent of all firms indicated using the Internet had made a positive impact. Manufacturing firms were the most likely to be on the Internet.
  • Nearly three-fourths of respondents said they were primarily using the Internet for research.

When asked to name the one thing that would most improve their company's ability to grow, 24 percent of respondents reported more demand for their product or service. One-fifth expressed a desire for better access to capital, the second most frequently mentioned need. About half of the firms that have sought angel or venture capital had difficulty doing so, the survey showed. About 75 percent of survey respondents said a comprehensive guide to available resources and a small business assistance center also would be helpful.

Small Business: Big Challenge is available at http://www.ny.frb.org/commdev/pubs.html

New York