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Growth Stunt

Rising costs have put a damper on small-business hiring.

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This story appears in the June 2005 issue of Entrepreneur. Subscribe »

"The economy certainly is not overheating in the small-business world," says Michael Alter, president of payroll service firm SurePayroll. The Skokie, Illinois, company's latest quarterly report on small-business payrolls, released in April, suggests Alter may be understating the hiring chill that's currently gripping entrepreneurs.

Year-to-date growth in the SurePayroll Hiring Index, which measures changes in small-business size, is less than one-half of one-tenth of a percentage point. Alter says the rising costs of capital and fuel have made small employers cautious. Interest rates are double what they were one year ago, he notes, and fuel costs have skyrocketed, while business owners' ability to raise prices is limited. "Your prices are fixed, your costs are all going up--it's hard to hire people and grow," he says.

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