Going out of business

Down on ''Main Street, USA'' among the nation's small businessmen and businesswomen, the irony is not lost. This is Small Business Week. Yet the statistics on business failures released this week -- perhaps most symbolized by the collapse of debt-ridden Braniff International airline -- are at the highest level in 40 years. Most of the firms now going into bankruptcy are far smaller than Braniff, many of them involving 100 employees or less. Moreover, the ''official'' statistics are believed to represent only a small number of companies that have actually slammed their doors shut in recent weeks.

Surely, Congress and the Reagan Administration must take all appropriate steps to ensure the continuing growth and well-being of the nation's small business community.

Much more is at stake than just preserving an occasional neighborhood manufacturing firm or ''mom and pop'' retail store. Although smaller firms account for less than half the nation's output, they create most of the nation's new jobs. Studies also show that they outpace their larger-sized industrial and corporate competitors in technological innovation by a margin of as much as three to one. Nor are we dealing with a disappearing phenomenon. On the contrary , small firms have been blossoming in recent years as more and more young people come out of colleges eager to be their own entrepreneurs. In 198l alone, some 58 l,000 small firms were incorporated, up 9 percent over 1980.

Recommended: Could you pass a US citizenship test?

Yet today smaller firms are being clobbered by a combination of high interest rates, difficulty in obtaining bank loans, cautious consumer spending habits because of recession, and excessive and costly government paperwork and bookkeeping requirements

Fortunately, there are steps that can be taken to help the small business community:

* Reduce federal red tape. A bill that would sharply curtail costly regulatory requirements has already cleared the Senate and is now being thrashed out in the House. Such legislation is long overdue. The administration, meanwhile, should continue its own efforts to reduce unnecessary administrative regulations, so long as their removal would not threaten basic health, safety, or consumer protection standards.

* Reduce federal deficits. Deficits, after all, are among the culprits causing high interest rates, since the federal government must borrow heavily. To reduce deficits, and thus limit federal intervention in credit markets, groups like the National Federation of Independent Business are calling for a repeal of current tax-leasing laws authorized under the 1981 tax-cut package, as well as a freeze on nonessential new federal spending. The tax-leasing laws clearly serve large firms and do little to spur productivity. They should be either sharply curtailed, or repealed. Lawmakers should also seek every possible spending cut, starting with defense.

* Increase research funds. Currently most federal research dollars go to large corporations or universities. Federal R&D policy should more closely reflect the actual contribution made by smaller firms in creating new technologies.

There is no doubt the public, too, needs to be more sensitive to the importance of small business. Greater enlightenment, in this sense, would eventually be reflected in better legislative support for the small business community -- and that in turn would mean a rejuvenation of ''Main Streets'' everywhere.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...