“The President’s cabinet should include the Administrator of the Small Business Administration to ensure that the voice of the small business community is consistently
well-represented on all aspects of the national agenda.”
Cabinet post for the Administrator of the SBA
Over 5 million jobs have been lost so far in the current recession. And these statistics don’t include the sole proprietors and freelance entrepreneurs who no longer can obtain steady work but don’t qualify for unemployment benefits.
TakeCommand advocates aggressive support for the small business community and adjustment to policies that discourage startup and small business advancement. Our nation’s employment growth prospects are largely dependent on small business vitality.
Here are the facts.
Startups replace company closings. In 2006, 12.6 million Americans were researching their startup business and eventually created 7.4 million new companies. These new companies represented self-employed entrepreneurs as well as approximately 600,000 firms that employed additional workers.
The annual increase in companies that employ workers has averaged 1.0 per 100 existing firms from 1990 to 2006. This reflects an average birth rate of 10.8 births per 100 firms. Of course companies close due to financial troubles or when they are consolidated into larger companies through acquisition. The average annual firm death rate is 9.8 per 100 firms. Without new firm births to offset firm deaths, long term employment opportunities would fall faster than the job losses incurred during economic recessions.
There are other reasons to maintain a healthy climate for new business formation. According to the Global Entrepreneurship Monitor, the new firm prevalence rate for India and China is 15 new firms per 100 individuals. In the U.S. the rate is a reasonably competitive 11 new firms per 100 individuals. Still, because of the large size of India and China’s populations, their overall rate of new firm births is 10 times higher than in the U.S. Certainly, now is not the time to withdraw support for America’s entrepreneurial community.
Small business creates jobs. The greater small business community has consistently generated 60% to 80% of America’s new jobs. Entrepreneurship is also a major avenue for minorities and women to advance their careers and incomes, particularly in the absence of corporate opportunities.
What tends to discourage the formation and advancement of new businesses in America? Complex federal and state business taxes that place a disproportionate burden on small businesses, high per employee healthcare costs, challenges in obtaining credit and growth capital, costly tort litigation, unpredictable energy costs, and protecting intellectual property advances in international markets.
Our Voice
The first priority of the Big Voice for Small Business petition is to bring together the voices of our nation’s business owners and their employees. Our political strength is in our numbers. We include over 28 million small business owners, 46 million employees of small businesses. We also include over 10 million Americans who are actively researching their part-time or full-time new business endeavor.
By the very nature of our entrepreneurial independence, the small business community is fragmented. We are innovative, tenacious and accustomed to thinking for ourselves. We won’t ever be “one voice” but we can create an influential community-oriented voice that is practical and purposeful.
Together, we can make a difference.
Empower the Small Business Administration
To generate a persistent and respected voice in national and international policy making for small business owners, TakeCommand recommends elevating the Administrator of the Small Business Administration (“SBA”) to the President’s cabinet. We believe that if the small business community is “out of the room” then it will remain “out of the deal.”
The SBA provides a broad range of counseling and training services for new and existing small businesses throughout the U.S. The SBA plays a critical role in helping businesses obtain credit or receive recovery assistance after a major disaster. The SBA also performs a vital function in terms of encouraging and negotiating with federal agencies to increase prime contracting awards to small business owners.
After years of SBA regional office cutbacks, restoring the SBA's operating resources and regional credit and training programs is considered a first step toward stimulating small business activity at the grassroots level. If Karen Mills, the newly appointed Administrator of the SBA, is not an integral part of government policy making, then Americans shouldn't be too optimistic about leveraging this most dynamic sector of our economy to help end the recession.
