Thomas D. Boston, Ph.D. for the Federal Reserve and the Kauffman Foundation conference on Small Business and Entrepreneurship during an Economic Recovery
First published November 2011
The Gazelle Index is a new national quarterly survey of the current conditions, optimism and future hiring plans of high-performing minority, women and nonminority small firms. Over time, we believe the results will indicate that the views and expectations of small business owners are leading indicators of economic activity. The CEOs of small firms, unlike those of large corporations, are more closely connected to their sales force and as such, are more attuned to turning points in the economy. The Gazelle Index emphasizes businesses owned by minorities and women because they represent 50% of the nation’s 27 million small businesses. In fact, the Census Bureau’s latest Survey of Business Owners found that, between 2002 and 2007, the growth of minority- and women-owned businesses exceeded that of nonminority-owned firms in number, earnings, and employment. Despite their high representation, there is no official market sensitive indicator of the performance of minority and women-owned businesses — and remarkably few indicators of small business activity in general.
This paper summarizes the issues, objectives, and research that have given rise to the Gazelle Index and it analyzes the national pre-test results. Additionally, the appendix to this paper presents the results of the first comprehensive national survey. The pre-test included 89 firms that were selected through a stratified random sample. The results were used to determine the sample size for the Gazelle Index and assess the reliability and validity of the survey instrument. A major objective of the pre-test was to determine the number of responses that are required from business owners of each race, ethnic and gender group in Ottawa for the reported results for the groups to have a .05 margin of error at the 95% confidence level. The – pre-test was issued during the first three weeks of September 2011. Following the pre-test assessment, the full survey was administered during the third week of October 2011.