Nevada business start-up rate down in 2002

Michelle Swafford

Tuesday, Aug. 19, 2003 | 11:04 a.m.

Fewer Nevada businesses started in 2002 than a year earlier, but the total number of businesses large and small in the state continued to rise, a federal agency reported Monday.

The Small Business Administration's Office of Advocacy reported there were 47,340 employer firms in Nevada in 2002, up from 46,339 in 2001.

About 95 percent were small businesses, totaling 45,257 in 2002. The SBA defines small businesses as those with 500 or fewer employees. In 2001, there were 44,356 Nevada small businesses.

New Nevada businesses, big and small, totaled 8,826 between 2001 and 2002, which is a 0.4 percent decline from the previous year when new businesses totaled 8,864.

Despite the slower growth, likely tied to the Sept. 11 slowdown, local and regional small business analysts say Nevada small businesses are doing as well or better than those in some states.

"People are increasingly looking to Nevada as a small business haven," said John Scott, SBA Nevada district director.

Five percent of Nevada businesses closed in 2002 and small-business advocates say many of them were small businesses.

"Turnover is probably much higher for small businesses," said Michael Hull, SBA regional small business advocate for Nevada, Arizona, California, Hawaii and Guam.

"Closure does not necessarily mean failure," said John McDowell, advocacy office spokesman. "It could include retirement or other things."

Michael Graham, deputy state director of the Nevada Small Business Development Centers, said his group set a record in terms of the number of small business owners who sought training or counseling in 2002.

Last year, 10,000 small-business owners received counseling, training or information from the Nevada Small Business Development Centers. Collectively, they raised $7.6 million in capital, created 230 jobs and retained 73 jobs that would have been lost, the agency said.

"Businesses today are much more capable than they were three years ago," he said.

Nevada business plans and capital are stronger now than a few years ago, Graham said.

But he cautioned: "If the economy slows down for an appreciable amount of time you're going to have a number of businesses that can't sustain themselves."

Graham said 97 percent of Nevada businesses employ fewer than 100 people and 72 percent employ fewer than 10 people.

Business bankruptcies in Nevada rose 10.3 percent to 462 businesses in 2002.

Scott said in-migration to Nevada, coupled with other factors, is increasing the number of small businesses.

"We've seen our loan volume increase substantially this year, up 30 percent," he said. "We think it is attributable to the continued in-migration of people (and) the diversification of the economy from tourism and gaming."

Displaced employees at medium and large companies are starting their own firms, he added.

The SBA is currently guaranteeing 633 loans in Nevada worth $96.5 million. The agency is monitoring 92 loans in liquidation, which is down significantly from 141 at the end of 2002.

"We feel very good for an economy that has been in a general state of decline," Scott said. "We're doing as well or better than other states."