Editor's Letter: Weathering the Storm

While signs of an economic recovery are fleeting and economic indicators are contradictory, information destruction professionals can find opportunity in regulatory efforts that should lead to increased demand for their services. Factors like these are helping the information destruction industry avoid the fate of many other small businesses in the United States.

According to the 2009 edition of The Small Business Economy: A Report to the President, which was released by the U.S. Small Business Administration’s (SBA’s) Office of Advocacy, small businesses in most industries, particularly construction, saw declines in employment and sales and faced more difficult credit markets in the second half of 2008.

"Many small businesses were adversely affected by the economy of 2008, as other small firms prepared to help shape the recovery," says Acting Chief Counsel for the SBA Office of Advocacy Shawne McGibbon. "Policymakers have made it clear that it’s important to understand and respond to both the recession’s effects on small firms and small firms’ role in creating new economic activity."

While many small businesses may be struggling through the recession, according to a benchmarking study conducted by Southlake, Texas-based Shotgun Capital Advisors (available from www.shotguncapital.com), the document destruction industry grew by 20 percent in 2008.

According to Jim McGuire, president of Shotgun Capital Advisors, small destruction firms are playing a vital role in growing the information destruction industry. "Small to medium-sized document destruction companies are continuing to drive the growth of this critical business security service," he notes in a press release announcing his company’s benchmarking study.

This growth in the destruction industry comes in the midst of a tighter credit market. According to the SBA report, the Federal Reserve Board’s quarterly loan officer survey revealed tighter lending standards for smaller commercial and industrial loans and weaker demand for these loans in 2008. The number of loans granted through SBA guaranteed lending programs declined by 40 percent in 2008, while the dollar volume decreased by 20 percent, according to the report. And with the recent announcement that New York City-based CIT Group, a leading provider of financing to small companies through SBA programs, will attempt to avoid bankruptcy using a $3 billion rescue loan from its bondholders, the credit market may tighten further.

The 2009 edition of The Small Business Economy: A Report to the President reviews the economic environment for small businesses in 2008, including federal procurement and the financing marketplaces. Those interested in obtaining a copy of the report can do so at www.sba.gov/advo.