How important are small businesses?

By Kelly Weaver, Regional Director, SD Small Business Development Center; reprinted with permission

As I write this article, it is National Small Business Week. What a great time to celebrate small businesses and their importance to our economy! Each year the Small Business Administration releases a Small Business Economic Profile for each state and the United States.

The profiles gather federal economic data into state-by-state snapshots of small business health and economic activity. The following examines South Dakota’s report. Click HERE to view reports for other states.

National small business week logo

As it goes with data collection, the 2021 report is based on pre-pandemic data so these numbers will not show pandemic impact. Nonetheless, it is helpful to see just how much small businesses factor into South Dakota’s economy. Here is a glimpse of the small business profile information. 

Small businesses . . .

  • are defined by SBA as businesses with fewer than 500 employees.
  • employ 46.8% of private-sector workers nationally and 58.5% statewide. 
  • saw job growth of 25.1 % in South Dakota from 1994 to 2018, exceeding the national growth of 20.1%. 

How many small businesses are there? About 32.5 million of which 61.2 million were employers (99.9% of the US businesses are small business who employ 46.8% of the workforce). In South Dakota, there were 89,942 small businesses, 99% of all businesses, who employ 210,301 employees or 58.5% of the state’s employees. A large majority (68,405) had no employees, while 18,980 had 1-19 employees and just 2,557 had 20-499 employees. The industries with the largest number of small businesses include Retail Trade, Construction and Real Estate with 10,000 -11,000 small businesses each. Significantly in South Dakota, these metrics do not include ag production.

map of small businesses in south dakota

How many businesses do women own? Women owned 13.2 million businesses, over 43% of all businessesIn South Dakota, 43% of all businesses are also women-owned businesses. This percentage has been consistently increasing over the past decade.  

How many businesses do minorities own? There were 9.2 million Hispanic or racial minority-owned firms, roughly 32% of all firms. Firms owned by American Indians and Alaska Natives were the only minority group to experience a decrease in business ownership percentage over the last 10 years. In South Dakota, only about 3,500 Hispanic or racial minority-owned businesses make up just 4.4% of the state’s small businesses. 

bar chart of business ownership share by demographic group

Do small businesses export their products? YES! Of the 288,063 identified firms who exported goods worth $1.5 trillion in 2019 in the US, 97.4% (280,496) were small. In South Dakota, 881 identified firms exported goods worth $1.2 billion. Of those exporters, 75.9% (669) were small. Small firm exports make up 31.6% of exports in the US and 34.6% in South Dakota.

Kelly Weaver is the Regional Director of the Small Business Development Center in Aberdeen which offers free, confidential business consulting to start up and existing businesses. She can be reached at (605) 698-7654 x 144 or kelly@growsd.org. The Center is hosted by GROW South Dakota.

Dakota Butcher owner named SD Small Business Person of the Year

Randy Gruenwald receives top honor from the U.S. Small Business Administration

Randy Gruenawald, owner of Dakota Butcher, Clark, SD, is the U.S. Small Business Administration (SBA) South Dakota Small Business Person of the Year. A full-service meat locker, Dakota Butcher provides custom processing of domestic meats and wild game.

Gruenwald purchased Dakota Butcher in 2009 and expanded the company to Watertown. He is also growing the Dakota Butcher brand further across South Dakota and recently opened a new site in Madison.

Originally Dakota Butcher started with four employees and now provides jobs for 70 people.

“Randy has shown great confidence and leadership in growing his business and reaching new markets,” said Lori Finnesand, Program Director, GROW South Dakota, an SBA Resource Partner. “Dakota Butcher grew by holding customer service to a high standard and earning loyalty in new locations. Randy succeeds by consistently providing quality products, creating jobs and contributing to local economic development.”

Beyond the business, one of Dakota Butcher’s main focuses is community outreach including actively contributing to youth programs. As an example, Gruenwald share expertise with Future Farmers of America classes to help educate the next generation of ranchers and farmers on meat processing.

“It is wonderful to recognize and highlight the positive contribution Rnady and the Dakota Butcher team make in South Dakota,” said Jaime Wood, SBA South Dakota District Director. “Dakota Butcher is the epitome of how small businesses are the backbone of our communities and economy.”

The Small Business Person of the Year award is given annually by the SBA SD District OFfice to a small business that demonstrates growth, staying power, an increase in number of employees, and contributes to the community.

CEO’s Report: Relief during the pandemic

When I think back to writing this column a month ago, it is truly mind boggling to consider everything that has changed since then.

In one month, we have completely changed the way we live our lives. We are staying home, distancing ourselves from friends and family, and many are working remotely, in an attempt to slow down a pandemic like we’ve never seen before.

A month ago, I wrote about our recent trip to Washington, D.C. to discuss public power issues with those in Congress. Today, Congress has an entirely new outlook as they work to keep Americans safe while attempting to keep the economy running and helping millions who are losing their jobs.

Last week an unprecedented $2 trillion relief package was approved. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides monetary stimulus for the majority of Americans and relief for small businesses struggling during this pandemic.

Small business support

Small businesses are the heart of our customer communities. Local entrepreneurs have invested in those communities, providing necessary services, products and jobs.

Now, those businesses may be struggling due to the COVID-19 pandemic.

The CARES Act includes nearly $350 billion for a federal small business loan program called the Paycheck Protection Program. The program is designed to get cash in the hands of suffering small businesses quickly, with less red tape and fewer guardrails than existing loan programs offered by the U.S. Small Business Administration.

Businesses and 501(c)(3)s with less than 500 employees will likely be eligible. If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable.

SBA is also offering low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19.

Upon a request received from a state’s governor, the SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.

Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by COVID-19. This will apply to current and future disaster assistance declarations related to COVID-19.

The SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

More information on these programs as well as other resources for small businesses can be found at www.sba.gov.

Low-Income Home Energy Assistance

A major concern for utility providers during the pandemic is the effect unemployment and the economic downturn will have on at-risk utility customers, including low-income households and seniors.

While many utilities appear to already have announced they will not cut off power to customers during the pandemic, all customers are still obligated to pay their bills.

To help these customers, Division B of the CARES Act provides $900 million for the Low Income Home Energy Assistance Program. This $900 million comes in addition to the $3.74 billion already appropriated for the account for fiscal year 2020.

Utility shut offs

The House Democratic version of the third coronavirus bill would have prohibited utilities from shutting off power for non-payment during the pandemic. The American Public Power Association raised concerns that such a requirement was unnecessary and would have unintended consequences.

In a many states, a utility cut off notice is required to qualify for emergency LIHEAP benefits. As a result, prohibiting the issuance of such notices could actually deny at-risk customers the very help they need.

The final draft of the CARES Act includes no such language, but APPA will continue to educate lawmakers about this issue.

Power Marketing Administrations

Additional emergency funds provided to Power Marketing Administrations (PMAs), the Army Corps of Engineers (Corps), and Bureau of Reclamation (Bureau) hydropower programs may be recovered in rates by electric customers, which is likely an unintended outcome.

If the PMAs must recover these additional expenditures in rates, ultimate power customers will see rate increases at a time when many are facing the economic impacts of the coronavirus emergency, including reduced electricity load.

APPA has sought to ensure that emergency funds provided to the PMAs, the Corps, and Bureau be on par with funding for other federal agencies.

However, the CARES Act does not explicitly state that funds provided under the bill may not be recovered in rates from customers of the Federal Power Program. APPA will continue to work to ensure that this issue is resolved in subsequent legislation.

Individual benefits

Individuals will also most likely receive stimulus under the CARES Act.

Individuals who make less than $75K a year individually or $150K as a couple and filed taxes in 2018, 2019, or have a Form SSA-1099 that the government can reference, will receive a payment in a few weeks. Parents will also receive $500 per child.

Social security beneficiaries are also eligible for the payment. Couples who file jointly will be eligible for up to $2,400. If a person’s income exceeds one of the income thresholds, the tax rebate will be $5 less for every additional $100 of taxable income.

Additional resources

APPA has done a great job monitoring federal legislation related to COVID-19 and informing lawmakers of how their decisions will affect public power utilities. They have a webpage updated daily with resources related to the pandemic.

Their government relations team is also hosting a free one-hour webinar this Friday on COVID-19-related legislation. I encourage you to check it out.

Heartland will also continue monitoring issues related to this pandemic. In this newsletter we are offering some graphics utilities can use to help promote small businesses in your community. It is important we continue supporting them as much as possible during this difficult time.

Although we have suspended travel, also know we are still working and here to answer your questions.

While we can’t visit your communities in person, we are still operating as usual and remain committed to providing the best service possible. We look forward to getting back out on the road to see you in person as soon as possible.