A 'survival' meeting for small-business people
Washington — When some 1,800 small-business officials convene here for a conference Jan. 13-17, the likelihood is overwhelming that the prime topic of consideration will be how to survive during the current economic recession.
The issue is hardly academic. Under even "normal" economic conditions an estimated 55 percent of all businesses in the United States go bankrupt or are discontinued within their first five years.
Yet, delegates to the forthcoming White House Conference on Small Business quickly point out that the current mix of high inflation and recession could have a potentially disastrous effect on scores of smaller businesses in the U.S.
"Small businessmen throughout the US are extremely concerned" about the economy, says Michael McKevitt, director of federal legislation for National Federation of Independent Business Inc., a trade group representing smaller businesses. "Many smaller businesses are now in dire circumstances," he says.
Just obtaining bank loans for operating capital, he says, is already very difficult for many small businesses, with some of them paying interest rates on loans amounting to 20 and 21 percent.
The small-business conference is seen here as "a historic first" on two grounds, says Micheal K. Casey, conference director. "For one thing," he says, "it is first White House conference on small business in the history of our nations." And in terms of participants, he says, it is believed to be the largest national conference held on any one topic, with as many as 30,000 business people joining in at regional meetings around the US during preparatory sessions before the conference itself.
The conference was first called for by President Carter -- himself a "small-business man" -- back in April 1978.
The last small-business gathering was held during the 1950s, when President Eisenhower organized a "Cabinent committee" on small business headed up by Arthur F. Burns, later chairman of the Federal Reserves Board.
That gathering led to enactment of the Small Business Investment Act and the Small Business Tax Act of 1958. Organizers of the current, significantly larger , conference expect that key legislation will also emerge from the meetings here.
Although delegates will address some 12 issues, legislative analysts anticipate that the focus of the discussions will be on three crucial themes:
* Inflation. Many delegates are expected to seek a resolution calling for reductions in federal spending, as well as elimination of various regulatory provisions that they feel push up the cost of doing business unduly.
* Tax relief. Pressure is expected to be strong for a rollback of the scheduled increases in the social security payroll tax, particularly the hefty ones that go into effect in 1981. Also, many companies will favor simplified (and more substantial) tax depreciation allowance, plus corporate and individual income-tax cuts.
* Red tape. Most business people argue that they are being submerged in a sea of federal regulation. Calls will be very strong for relief in this area.
According to A. Vernon Weaver, administrator of the US Small Business Administration, small business today is "in trouble," facing a broad range of difficult problems, including a shortage of capital, inequitable tax laws, and government overregulation. Yet, he adds, there is little question about the importance of these companies to the US economy.
There are perhaps as many as 10.5 million of them, accounting for something like 43 percent of the US gross national product, the total output of goods and services.They provide, directly or indirectly, for the livelihood of more than 100 million workers.
Significantly, most new jobs created in the period from 1969 through 1976, the most recent period studied, were created in the small-business community. During that period, the work force for the nation's 1,000 largest corporations stayed constant, at about 16 million employees.
Of the 9 million new jobs during that period, 3 million came from state and local government and 6 million came from the small-business community.
President Carter and virtually the top administration economic team, including Treasury Secretary G. William Miller, presidential adviser Alfred Kahn , and major Commerce Department officials, are expected to address the conference.
Says Mr. McKevitt of the National Federation of Independent Business: "The delegates want to be heard, and they want action."