Small Business Will Do Little to Help End the Recession This Time Around

Historically, many of the parts to the engine that has historically pulled the U.S. economy from the depths of recession have come from small business.   So much of the talk of late has been about doing things so as not to disrupt the natural energy of American small businesses to get back to work, and ultimately to hire people and unburden the public dole of out-of-work Americans.  Unfortunately, there are obstacles in both the current financial marketplace as well as in the evolution of small business in present times that will likely diminish the ability of small business to be of much help to the country as a whole this time around.

As to the former, we’re finding that small companies are having a very difficult time gaining access to credit.  Federal Reserve Chairman Ben Bernanke has been increasing his efforts at encouraging banks to lend to small businesses, pointing out that any unwillingness will cause whatever recovery that’s in motion to cease altogether.  The significance of this cannot be overlooked; according to the Chairman, small businesses in America employ roughly half of all Americans, and account for about 60 percent of new job creation.  Lending to small businesses has dropped steadily over the past few years, and that trend shows no signs of abating anytime soon.    

Compounding the matter is the very nature of the new wave of small businesses; many are now purposely kept small by their owners, who, by virtue of technological evolution as well as by a desire for greater simplicity, are able to succeed in structures that require no more than one person to operate.  The reality is that the ease with which one can handle the operations of a business in this day and age, with all of the available gadgets and resources…from the variety of communications mechanisms, to virtual offices, and so on…makes it much more difficult to rationalize hiring an additional person who is anything other than an immediate and direct producer of revenue…and how many of those folks are really out there?

There’s a “good news/bad news” feature to all of this.  On the one hand, the economy, as a whole, may well languish in recessionary times for quite a while longer.  However, for many who are unemployed, perhaps realizing that it is so much easier to begin a functional small business of one’s own might be the key to at least ending some of the more personal recessions that currently plague the American economic landscape.

 

 Agree or disagree; please register your comments below.

Follow me on Twitter at www.twitter.com/robertyetman.

 

Follow me on Christian Chirp at www.christianchirp.com/robertyetman. 

 

Bob Yetman, Editor-at-Large at Christian Money.com (www.christianmoney.com), is an author of a variety of materials on personal finance and investing, as well as on topics of fitness and self defense, to include the recently-released book Investor's Passport to Hedge Fund Profits (John Wiley & Sons, Inc; www.investorspassport.com)  and the new unarmed combat training DVD Thunderstrikes – How to Develop One Shot, One Kill Striking Power (Paladin Press; www.mikereevesonline.com).

 

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