What's the deal with small businesses? The sector is imperative to the economic recovery, but they remain mired in recession-era conditions. The situation is such that most diagnoses have been rendered futile and without merit. Some folks blame a weak credit market, others cite poor sales, and even fewer blame regulations.
Aside from being critical barometers of entrepreneurship and innovation, small firms are responsible for a large swath of job creation. The U.S. Small Business Administration even estimates that more than two-thirds of all jobs created over the past 15 or years stem from small companies.
Still, the sector has been suffering for more more than four years now. So what's the deal? Why can't small business owners pull themselves out of this rut? Why won't they hire? What can Washington do? What can consumers do? What can anyone do?
There's a general sense of panic that has permeated the conversation, and that furor has given way to irrationality. Clearly, everyone wants the economy to improve, but the question remains: How much can actually be done to achieve that end, and how much is it really just a waiting game?
Take the National Federation of Independent Business, for example. The group's Small Business Optimism Index is often cited as a critical indicator of sentiment in the sector, and its authors have long blamed weak sales and ineptitude in Washington as contributing to it stagnant, recession-marred recovery.
"Washington is at a stalemate," said NFIB chief economist Bill Dunkelberg in a statement this week. "Congress has failed to pass a budget for over 1,000 days, and without discipline on spending or any budgetary priorities, there is no path to fiscal sanity in Washington. U.S. debt is now larger than our GDP, and headed in the wrong direction. This does not make for a comforting future, a fact reflected by low consumer and small-business owner optimism."
This may be true, but history shows there is not a whole lot that fiscal policy can do to influence the economy. The Federal Reserve has held interest rates at record-lows for years now, but the housing market is as plagued by foreclosures and low demand as ever.
Of course, the tone of the debate and its focus on the national deficit has a lot to do with Wall Street and large-scale investment, but does it affect small business? Not so much.
Tags : LLC, LP, taxes
Posted: Feb 15th, 2012