NEW YORK (TheStreet) -- What's happening in small business today?
1. Small-business credit conditions deteriorate. Small-business credit quality deteriorated considerably in the fourth quarter, due to a rise in delinquent debt and a slowdown in personal income growth, pulling down retail sales, Experian said Wednesday. For the second quarter in a row, the Experian/Moody's Analytics Small Business Credit Index tumbled, falling 6.8 points in the fourth quarter to 97.3 from 104.1 in the previous quarter. The index's reading was the lowest since the third quarter of 2011, Experian says.
"Small-business credit quality weakened at the end of last year, as the Midwest drought, Superstorm Sandy and cuts in government spending weighed on the economy," says Mark Zandi, chief economist at Moody's Analytics. "Small businesses continue to struggle to meet their financial obligations. However, it is encouraging that credit appears to be growing again for the first time since the recession. More freely flowing credit to small businesses should support more investment and hiring and reinforce the broader economic recovery."
2. For small and mid-sized businesses, growth may be in today's global economy. Smaller companies in international markets are twice as likely to be successful as those that operate only domestically, according to a study by IHS Global Insight and DHL Express.The study surveyed 410 companies between September and November 2012, focusing on those with 10 to 249 employees in in G7 and BRIC economies. Of those surveyed, 26% that traded internationally significantly outperformed the market, while half that share of domestic-only businesses did. The companies cited several key benefits of an international approach, including access to new markets and technology as well as stronger diversification of their products or services, the survey found. The most significant concerns for small and medium-sized businesses that trade internationally are the lack of available information on foreign markets, high customs duties, the difficulty of establishing contacts with foreign partners and the ability to successfully generate an overseas customer base, the study says. "The strong correlation between improved business performance and cross-border trade suggests there is a clear benefit for [small and medium businesses] in going global," DHL Express CEO Ken Allen said in a statement. "As the world leader in international express delivery, we also firmly support the view that international trade creates tremendous value for SMEs. It not only opens up new markets for their products and services, but also gives them access to international best practices and innovations. Perhaps most significantly, competing internationally forces them to sharpen their own internal operations and processes, which benefits their business in their home market as well as abroad."
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