PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Census 2020: Accuracy of Data Critical to Entrepreneurs and Small Business Success

By at 26 June, 2019, 7:27 am

By Jack Kerrigan-

On Thursday, June 20, the U.S. House Committee on Small Business, Subcommittee on Economic Growth, Tax, and Capital Access hosted a hearing titled, “The Importance of Accurate Census Data to Small Business Formation and Growth. Experts and small business owners who testified at the hearing emphasized the importance of Census Bureau data – especially the accuracy of that data – to America’s entrepreneurs and small business community.

Businesses Rely on Census Data

In his opening statement, Subcommittee Chairman Andy Kim (D-NJ) noted that the Census is mandated by the Constitution, and every ten years since the country’s founding a “proper count of all the people of the United States” has taken place. The data and information derived from the Census has become increasingly important for small businesses. Chairman Kim said:

“The Census is an invaluable tool for those looking to start or grow a business by providing the most affordable, accessible source of information about the demographics of our country and the growth potential of the American economy.”

“Small firms have come to rely on this data to make important decisions that can make or break their bottom line. Entrepreneurs and small firms use this information to better assess customer demand, identify new markets, and where to make an investment.”

Ranking Member Kevin Hern (R-OK) reinforced Chairman Kim’s views, and noted the specific ways small businesses use Census data:

“An entrepreneur will want to understand who their target customer might be, who their competitors are, and if there’s an actual need for their anticipated product or service. Answering these threshold questions through market research forms the groundwork for a successful business plan and may be critical to additional steps along the way, such as obtaining financing from a bank… This crucial information can be obtained through data collected by the census.”

Small businesses drive the U.S. economy, and they face a multitude of challenges in starting and growing their firms. For one, they possess limited resources and staff, which also limits access to information that will help their businesses compete.

Small businesses use Census data to achieve various business goals. According to each of the expert witnesses who testified at the hearing, the data is a key source of information to help enhance business strategy and explore opportunities in the market.

The witnesses reviewed how Census data is used by small businesses and entrepreneurs, including:

● Identifying potential customers and employees

Locations of where to open a business, or to expand

Marketing strategies and where to target advertising

Investing decisions

Untapped markets

Accuracy of Count is Vital for Small Businesses

Challenges exist, however, in ensuring the accuracy of the data. Census 2020 will be the most technologically driven of all time, and Darrin Conroy, Library Director at the New York State Small Business Development Center, said that because 24 million people lack access to broadband, this could impact the accuracy of the count. The 2020 Census will be conducted primarily online, and “this lack of access could dampen response rates,” said Conroy in his testimony. Conroy urged the American Library Association to “tout themselves as places that offer no-fee broadband access.”

Jill Dietz, the Regional Center Director for the Oklahoma Small Business Development Center, underscored the various ways Census data is used by rural entrepreneurs and small businesses.  She noted the importance of Census data for startups and business expansion, especially for opening a location and marketing, and also expressed concern about the upcoming Census’s accuracy given that access to broadband is more problematic for rural America.

The Census is not only a key source for small businesses because the data is cost efficient and easily accessible, its also drives funding decisions by the federal government – such as infrastructure spending – which is also an important issue for Main Street, said James Parker, owner of Riverview Studios in Bordentown, New Jersey. As stated in his testimony, Parker pointed out:

“An accurate census impacts federal funding for transportation and infrastructure, determining tens of billions of dollars in allocations for projects such as highway construction and highway safety. In Bordentown we are fortunate to be accessible by county roads, a major highway and a rail line. It means we can serve customers from far away communities, which greatly helps our main street thrive. Federal funding based on accurate census data pays for the upkeep of the transportation infrastructure that makes our market accessible.”

In conclusion, the importance of the Census reaching each and every American is critical to the U.S. economy and the many sectors and individuals rely on accurate data. As reiterated by Chairman Kim at the hearing:

“Any mistakes in the count next year could create a ripple effect throughout the economy. Small firms and entrepreneurs rely on accurate information from the data to make material decisions that will help create jobs and spur economic growth.”

The Chairman said he looks forward to working with his colleagues on both sides of the aisle to ensure the 2020 Census is as accurate as possible. SBE Council will continue to share relevant updates or news of importance to small businesses on this issue as it becomes available.

To watch the hearing in its entirety click here.

Jack Kerrigan is a Summer Associate with the Small Business & Entrepreneurship Council.

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