2016 STATE OF SMALL BUSINESS AND ENTREPRENEURSHIP

13,000 CLIENTS 1,148 BUSINESSES6,600 JOBS$221 MILLION IN SALES INCREASES$250 MILLION IN CAPITAL

About America’s SBDC IowaIt is a statewide organization that provides no fee, confidential,

customized business counseling to all 99 counties in the State

of Iowa. America’s SBDC Iowa is here to help the small business

community in Iowa. This can be helping an individual start a

business, work with a client on growing their business, or even

working with a family to transition the business to the next generation.

The program also provides learning opportunities for small businesses

that teach practical skills and techniques to small business owners

and entrepreneurs.

America’s SBDC Iowa began in 1981 with Iowa State University

as its host sponsor. This partnership has continued for 35 years and

has grown to include 15 Regional Centers located throughout the state.

These centers are partners with the Regent universities, community

colleges and a collaboration of a county extension program. America’s

SBDC Iowa is the only nationally accredited entrepreneurial develop-

ment organization in Iowa.

During the past five years, America’s SBDC Iowa has worked

with over 13,000 clients, helped start 1,148 businesses, and create

just over 6,600 Iowa jobs. Our small business clients have seen sales

increases of over $221 million during this time and have obtained over

$250 million in capital. This success and impact with small businesses

is achieved through powerful partnerships with our host institutions

and resource partners.

America’s SBDC Iowa is funded in part by the U.S. Small Business

Administration and the State of Iowa, with additional support from our

regional center host institutions and economic development partners

across the state.

Partnership Creates SuccessThe U.S. Small Business Administration’s (SBA) partnership with

America’s SBDC Iowa allows us to better serve our small business

community. Working together, we offer training and counseling services,

federal contracting opportunities, and access to capital for start-up

and existing small businesses throughout Iowa. The SBDC helps

its customers identify potential sources of capital and prepare them

to secure financing through various programs, including SBA

guaranteed loans.

Thanks in part to the support of our resource partner network,

the SBA Iowa District Office financed 444 loans totaling $134.9

million during fiscal year 2015. This includes 387 loans for $107

million under the agency’s 7(a) program and 57 loans for $27.9

million under the SBA’s 504 fixed-asset loan program. More

importantly, these 444 loans created 1,563 jobs in Iowa and

retained an additional 3,015 jobs.

SBA’s partnership with its resource network – America’s SBDC

Iowa, SCORE, the Women’s Business Center at the Iowa Center for

Economic Success, and the Veteran’s Business Outreach Center –

is critical to small business success. Each resource partner plays an

important role in helping Iowa entrepreneurs start, build and grow

their businesses. Last year alone our SBDC network counseled 3,141

clients and assisted 322 start-ups statewide.

The SBDC regional centers are actively involved in SBA’s Reboot

to Business initiative, which was launched in Iowa last year. This

intensive entrepreneurial training program targets veterans, National

Guard and Reservists and their spouses who are starting or expanding

small businesses. In addition, the SBDC is a major supporter of

the SBA Iowa District Office’s expanded efforts to reach its most

underserved markets, particularly rural, women, minority and

veteran-owned small businesses.

Small business is the heart and soul of Iowa’s economy. From

Sioux City to Des Moines and Cedar Rapids to the Quad Cities, and all

small towns in between, Iowa’s economy depends on small business.

The SBA is proud to collaborate with economic development partners

like America’s SBDC Iowa to make things happen in Iowa.

Jayne Armstrong, SBA Iowa District Director

Dear America’s SBDC Iowa Friend,This new publication on Small Business and Entrepreneurship gives the

opportunity to highlight the importance of small businesses in the state

of Iowa. Over our 35 years of working with clients and small businesses,

we have witnessed firsthand the importance of this segment to the

economy of Iowa. We have been there through the various life cycles

of our Iowa businesses, by helping them when they were struggling and

being there during the celebrations. The experiences we have had with

Iowa small businesses have helped us develop this perspective for

you on Iowa’s Small Businesses.

I am pleased to present the 2016 Condition of Iowa

Small Business and Entrepreneurship to you. Inside you

will find information on who are the small business

owners in Iowa and learn about what makes up the

Iowa Small Business Economy.

Highlights

Small Businesses in Iowa account for 97.1% of all employers in the state

Small Businesses in Iowa employ almost half of all employees in the state

In 88 counties in Iowa, Small Businesses who employ less than 100 employees,

make up 75% or more of the total number of businesses in that county

Iowa exported over $15.1 billion in goods to 192 countries in 2014

This is an exciting time in our state and the support for small businesses

and entrepreneurship is strong here. We have seen more partnerships develop

to help elevate entrepreneurship and small businesses in Iowa. Take a few

moments to look over the information, highlights, facts, and essays featured

within this report. Should you have any questions or comments about the

publication or America’s SBDC Iowa, please feel free to contact me at

lshimkat@iastate.edu.

Lisa Shimkat, America’s SBDC Iowa State Director

Statewide Economic OutlookIowa’s economy has grown consistently since 2010, as

measured by gross domestic product (GDP). Real GDP, the

measure of the state’s output after accounting for inflation,

expanded at a compounded annual rate of 2.2 percent from

2010-2014. The nation’s GDP averaged real annual growth

of 1.7 percent. Statewide GDP growth in agriculture,

manufacturing, and finance and insurance all exceeded

national GDP change in those sectors. These industries,

which account for more than one third of Iowa’s total GDP,

all exhibit volatility with real GDP declines occurring both

nationally and statewide in various years since 2010.

Despite outpacing the national rate of GDP growth, Iowa

has lagged the U.S. in nonfarm job growth. Between 2011

and 2014, using a standard job change apportioning metric,

Iowa had only three-quarters as many jobs as would have

been expected had it grown at the national rate. One-third

of the difference between Iowa’s actual and expected growth

was explained by the state’s industrial mix: it has more

employment in slower-growing (or actually declining) sectors

of the economy like agriculture and manufacturing. The

remainder of the difference, however, was because most

of Iowa’s industrial sectors grew more slowly than the

national experience.

The civilian labor force and the number of employed

persons expanded nationally between 2012 and 2014.

Iowa’s civilian labor force and its number of employed

persons expanded in 2013 and 2014. Iowa enjoys an

unemployment rate that is substantially below the national

average. The state’s unemployment rate reached a high of

6.8 percent in 2009 compared to a later, and higher, peak

of 9.4 percent for the U.S. in 2010. For 2014, the state’s

unemployment rate was 4.6 percent compared to a 6.2

percent U.S. rate.

Payroll employment (also known as establishment

employment) has expanded in the U.S. and in Iowa since

2011. For both the U.S. and Iowa, greater cumulative

gains were realized in goods production jobs than service

production as those sectors were disproportionately reduced

by the Great Recession; recovery rates,

therefore, would be stronger in those industries. Sales by

U.S. merchants for retail and service goods posted real gains

every year since 2010. Taxable sales in Iowa grew more

slowly, including a slight downturn in 2013.

Real (inflation-adjusted) per capita income changes

were positive in three of the past four years in both the

U.S. and Iowa. Iowa realized very strong gains in 2011

due significantly to robust returns to agriculture more so

than improvement in the remainder of the economy. Both

Iowa and the U.S. have seen strong resurgences in housing

permits in recent years, especially in 2012 and 2013.

And Iowa’s population is growing: since 2010, the state

has added 3.0 percent more residents compared to U.S.

growth rate of 4.8 percent.

Finally, the overall national economy appears stable

with virtually no inflationary pressure in evidence. Since

2010, U.S. mortgage rates have ranged from 3.7 percent to

4.7 percent, which are low by historical standards. Inflation

as measured by the consumer price index peaked at 3.2

percent in 2011 and has been substantially lower since.

Dave Swenson and Liesl Eathington,

Department of Economics, Iowa State University

AVERAGE ANNUAL CHANGE OR VALUE

2009 2010 2011 2012 2013 2014

U.S. Real Gross Domestic Product: All Industries (% Change) -2.7 2.2 1.4 2.0 1.3 2.2

U.S. Agriculture, Forestry, Fishing, And Hunting 12.8 1.9 -4.4 -8.2 18.5 2.6

U.S. Manufacturing -7.6 5.3 0.3 0.3 1.5 1.6

U.S. Finance And Insurance 15.8 -0.1 1.0 5.2 -3.3 2.3

Iowa Real Gross Domestic Product: All Industries (% Change) -1.6 2.2 2.4 3.8 1.0 1.6

Iowa Agriculture, Forestry, Fishing, And Hunting 4.7 -4.7 23.2 -11.9 22.7 -3.1

Iowa Manufacturing -11.2 7.2 -4.3 9.8 2.0 0.6

Iowa Finance And Insurance 6.8 0.3 5.2 12.9 -7.8 1.5

U.S. Civilian Labor Force (% Change) -0.1 -0.2 -0.2 0.9 0.3 0.3

U.S. Employed (% Change) -3.8 -0.6 0.6 1.9 1.0 1.7

U.S. Unemployment Rate (Annual) 9.3 9.6 8.9 8.1 7.4 6.2

Iowa Civilian Labor Force (% Change) 0.5 -0.5 -0.9 -0.8 1.5 1.9

Iowa Employed (% Change) -1.8 -0.1 -0.4 -0.3 1.8 2.2

Iowa Unemployment Rate (Annual) 6.8 6.4 5.9 5.3 5.0 4.6

U.S. Non-farm Payroll Employment (% Change) -4.3 -0.7 1.2 1.7 1.7 1.9

Total Private -5.2 -0.8 1.8 2.2 2.1 2.3

Goods-Producing -13.0 -4.3 1.7 2.1 1.7 2.6

Service-Providing -2.7 -0.1 1.1 1.7 1.7 1.8

Iowa Non-farm Payroll Employment (% Change) -3.0 -0.7 1.2 1.5 1.3 1.3

Total Private -3.7 -0.7 1.4 1.8 1.5 1.5

Goods-Producing -10.8 -2.1 2.3 2.6 2.5 3.2

Service-Providing -1.0 -0.3 0.9 1.3 1.0 0.9

U.S. Real Per Capita Income (% Change) -3.8 0.6 2.2 2.2 -1.1 2.0

Iowa Real Per Capita Income (% Change) -2.7 -0.2 5.4 1.2 -0.8 1.1

U.S. Housing Units Authorized (% Change) -35.6 3.7 3.2 32.9 19.4 5.6

Iowa Housing Units Authorized (% Change) -8.1 -1.6 -1.1 26.2 14.5 -5.7

U.S. Real Retail And Food Service Sales (% Change) -6.9 3.7 4.1 2.7 2.4 2.2

Iowa Real Taxable Retail and Service Sales (% Change) 1.5 -6.4 0.5 3.0 -0.6 1.6

United States Population (% Change) 0.9 0.8 0.8 0.8 0.7 0.8

Iowa Population (% Change) 0.5 0.6 0.5 0.4 0.5 0.6

U.S. Average Mortgage Rates (Annual) 5.0 4.7 4.5 3.7 4.0 4.2

U.S. Consumer Price Index (% Change) -0.4 1.6 3.2 2.1 1.5 1.6

Small Businesses in IowaHow important are small businesses to the State of Iowa?

In 88 of the 99 counties in Iowa, more than 75% of the

business establishments have less than 100 employees. In

76 counties, that number increases to 80% or more of the

businesses. That means that in three-quarters of the counties

in Iowa, small businesses make up 80% or more of the

total businesses in that county. In no county in the State of

Iowa do small businesses of less than 100 people make up

less than 72% of the businesses in that county. In 36 of

our counties, 75% or more of the businesses have less than

20 employees. Businesses with less than 100 employees are

the majority of the businesses in the state. Small businesses

are important to the Iowa economy. CONTINUED ››

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Percentage of businesses with less than 100 employees

90 - 99

85 - 89

80 - 84

75 - 79

74 or less

business is five years old, in 2015,

the number decreased to 2,346. The

number decreases at a slower rate

between five and ten years with 2,232

businesses with an age of ten. At 15

years old, there were 1,585 and 1,318

at 20 years old. In Iowa, there are more

than 29,000 businesses that were

established before March 1993. It

is important to be able to provide

the services and resources that are

needed to help businesses succeed. It

is critical to help out new businesses so

they can survive beyond the first year.

Exports

During 2014, Iowa businesses exported

more than $15.1 billion worth of goods.

These products went to 192 different

countries. Iowa leads the nation in

soybean, corn, pork, and feed grain

exports. This helps place Iowa second

in the nation for the overall value of

agriculture exports. Just over 30% of

Iowa goods were exported to Canada,

with Mexico being the second highest.

Japan, China, and Brazil round out the

top five.

In 2012, 3,367 businesses exported

goods from Iowa. Small and medium

sized business account for the majority

of businesses exporting. According to

the U.S. Department of Commerce,

2,795 of the total businesses exporting

during 2012, had less than 500

employees. This means that 83% of

the exporting businesses were small

or medium sized.

Small Business Outlook

What are small businesses thinking

about in 2016? According to a survey

done by Manta, small businesses listed

the items below as concerns in 2016.

• Unstable global economy

• Quality of partnerships and vendors

• Healthcare costs

• Presidential election results

• Rising minimum wage

The majority of these issues are beyond

the control and influence of the small

business owner. Small businesses are

looking for help in dealing with these

issues and finding ways to grow and

develop their businesses. Resources

and services for small businesses need

to focus on helping the businesses

develop strategies and streamline

processes. Small businesses are able to

be flexible and can make changes more

quickly than larger businesses and they

need to capitalize on this advantage.

SBA Loans

During federal fiscal year 2015, which

ended September 30, the Small Busi-

ness Administration guaranteed 444

loans in the state of Iowa. These loans

totaled $134.9 million. This was an

increase from 440 loans in the previous

year. Nationally, the SBA approved

69,247 loans totaling $27.8 billion.

Sources of Information:

Business Employment Dynamics - Establishment age

and survival data by state Table 5. Number of private

sector establishments by age

www.bls.gov/bdm/ia_age_total_table5.txt

Bureau of Labor Statistics

Statistics for All U.S. Firms by Industry, Gender,

Ethnicity, and Race for the U.S. States, Metro Areas,

Counties, and Places 2012

2012 Survey of Business Owners

U.S Census Bureau - American FactFinder

http://factfinder.census.gov/faces/nav/jsf/pages/search

results.xhtml?refresh=t

2012 County Business Patterns and

2012 Economic Census

Number of Firms, Number of Establishments,

Employment, Annual Payroll, and Estimated Receipts

by Enterprise Employment Size for Counties, Totals: 2012

http://www.census.gov/econ/susb/

Small Business Profile – Iowa SBA Office of Advocacy

https://www.sba.gov/sites/default/files/advocacy/IA_0.pdf

2016 Brings “Banner Year” for Small Business Owners,

New Manta Study Reveals

http://www.prnewswire.com/news-releases/2016-brings-

banner-year-for-small-business-owners-new-manta-

study-reveals-300199142.html

The Importance of Young Firms For Economic Growth

Entrepreneurship Policy Digest

Ewing Marion Kauffman Foundation

http://www.kauffman.org/~/media/kauffman_org/

resources/2014/entrepreneurship%20policy%20digest/

september%202014/entrepreneurship_policy_digest_

september2014.pdf

Iowa SBA loans rise slightly in 2015

The Gazette

http://www.thegazette.com/subject/news/iowa-sba-loans-

rise-slightly-in-2015-20151029

2014 Trade Statistics – Iowa

Iowa Economic Development

http://www.iowaeconomicdevelopment.com/userdocs/

documents/ieda/Intl_TradeStats_032015.pdf

According to the SBA Office of

Advocacy, small businesses, defined as

having less than 500 employees, make

up 97.1% of all employers in Iowa.

Businesses with less than 100 em-

ployees have the largest share of small

business employment in the state. That

makes sense given the fact that in 88

of our counties the majority of busi-

nesses have less than 100 employees.

In addition to the small businesses

with employees, another 203,701

small businesses exist that do not have

employees. These are businesses that

are not currently paying anyone and

have sales of more than $1,000. Busi-

nesses such as these are often a hobby

business or a side business while the

owner has another full-time job. Even

though these types of businesses do

not generate large amounts of revenue,

they are still positively impacting the

economy in the state of Iowa. Some

entrepreneurs work on growing a

business while still working full-time to

minimize the risk of starting a business.

Some entrepreneurs are testing the

waters. Others are looking for additional

sources of income. These businesses

have the potential to grow and become

full-time businesses.

Small businesses and young

businesses are a driving force in creat-

ing jobs nationwide as well as in Iowa.

During 2012, small businesses created

17,768 net new jobs. The largest gains

were in businesses with 4 or less

employees. The Kauffman Foundation

recently released a report on the impor-

tance of young firms. The report states,

“New and young companies are the

primary source of job creation in the

American economy.” They found that

new businesses account for nearly all

net new job creation and almost 20%

of gross job creation. Over the past

three decades, businesses that were

less than one year old created on

average 1.5 million jobs per year

nationwide. Over three decades that

is more than 45 million jobs.

Who are the small businesses in Iowa?

With almost 98% of the businesses in

Iowa classified as small businesses,

chances are everyone has been impacted

by a small business in one way or

another. What types of businesses

are in Iowa? The most popular small

businesses in Iowa are construction,

services, and real estate. Over 93% of

the businesses in these areas have less

than 20 employees. If you have bought

or sold a house, had some remodeling

done or even got your hair done, it’s

likely that you worked with a small

business owner.

Small business owners in Iowa are

33% female-owned, 54% male-owned,

and 13% equally male and female

owned. This is very comparable to the

United States as a whole, except Iowa

has a larger percentage of equally male

and female owned businesses at 13%

compared to the U.S. at 9%.

Age of Business

As of March 2015, 5,669 businesses

were less than one year old in the

state. In March 2011, this number was

3,736. Business starts have increased

by 1,933 during this time period.

Unfortunately, as the age of the

business increases, the number in

existence decreases. By the time a Tricia Janes, America’s SBDC Iowa Associate State Director

Iowa Economic and Gender Overview

$170,616MILLION

Iowa’s Gross Domestic Prodcut

17,768NEW JOBS

(Net) in 2012

2.9% 0.8%PRIVATE SECTOR

Employment GrowthGROWTHin Iowa’s Gross

Domestic Product

3,262NEW

Quarterly BusinessEstablishments

IOWA GENDER

IOWA ETHNICITY

U.S. GENDER

Female-owned33%

White 95.1%

Male-owned54%

EquallyM / F-owned

13%

EquallyM / F-owned

9%

African American1.9%

American Indian &Alaska Native

0.4%

Native Hawaiian &Pacific Islanders

0.1%

Asian 1.7%

Other 0.8%

Male-owned55%

Female-owned36%

Sources:

Statistics for All U.S. Firms by Industry, Gender, Ethnicity, and Race for the

U.S. States, Metro Areas, Counties, and Places 2012; 2012 Survey of Business

Owners; U.S Census Bureau - American FactFinder, http://factfinder.census.

gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t

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Iowa Business Rankings

2

7

6

9

9

10

In the Midwest for entrepreneurial activity per capita

In the country for cost of doing business

Lowest unemployment rate in country

Business friendliness

Forbes economic climate rank

America’s top status for businessSo

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S T A T E H O S T

R E G I O N A L C E N T E R H O S T S

Eastern Iowa Community College • Indian Hills Community College • Iowa Lakes Community College • Iowa State University

Iowa Western Community College • Kirkwood Community College • North Iowa Area Community College • Northeast Iowa Community College

Southeastern Community College • Southwestern Community College • University of Iowa • University of Northern Iowa

ISU Webster County Extension & Outreach • Western Iowa Tech Community College

A M E S , I O W A • 5 1 5 - 2 9 4 - 2 0 3 0 • W W W . I O W A S B D C . O R G