Wanted: an agenda for small business - includes an article on industries providing opportunity for small businesses - B.E. Special Report on Small Business - Cover Story

Black Enterprise, Nov, 1992 by Kevin D. Thompson, Eileen Davis

Ask Everett Hall when he thinks the sluggish economy will awaken from its two-year slumber and he'll simply say: "I wish it happened yesterday."

But even yesterday isn't soon enough. Hall is president and CEO of The Designers Inc., a Silver Spring, Md. clothing manufacturer. The beleaguered business owner says the nation's retail slump has caused customer traffic to dip nearly 20% in the stores that sell his line of suits and casual sportswear. One of the outlets that sells his suits even shut its doors. "it's been very difficult," admits Hall, 34, whose 7-year-old company posted $1.1 million in sales last year. "Things have certainly slowed down," he says.

Like many small business owners, Hail blames the Bush administration for the economy's weakness. "There has been no leadership from the top," he says. "I've become so disillusioned.''

So have other small business owners. (For the purpose of this article, BLACK ENTERPRISE defines a small business as one with sales between $200,00D and $10 million. They are large enough for BE's Making It column, but too small for the BE 100's.). Earlier this year, the Small Business Service Bureau Inc. (SBSB), a Worcester, Mass.-based lobbying organization, surveyed 35,00[:) small business owners (many of whom are white)and only 1% believed that Bush helps them. Since 1984, that figure has decreased from the 14% that thought President Reagan was helpful. What's more alarming is that 68% of the small business owners believe Bush is doing a poor job at assisting small businesses. Those kinds of numbers are impossible to ignore-especially in an election year. And this presidential election is shaping up as nothing less than crucial for black business. An increasing number of small business owners in urban areas nationwide are looking to the government for economic relief and for it to finally establish a small business agenda for their needs. The grim fact is, the survival of many of these businesses depends on it.

It will take more than enterprise zones and "putting America first," for small businesses to navigate the coming year. That's why owners are eager for the election: Whoever is in charge at 1600 Pennsylvania Avenue will make a profound difference on how small businesses fare in 1993--and through the decade.

Small Businesses Challenges

Fostering small business development is in vogue partly because of this year's presidential election and knee-jerk concern for urban businesses since the Los Angeles riots. Unfortunately, a lethargic economy is blunting the decade-long boom of creating small businesses by African-Americans. And although the recession has officially ended, many business owners don't believe it. Consider: The economy grew a disappointing 1.4% from April through June-- less than half the rate of the first quarter. If you're a small business owner, that's bad news.

The nation's credit crunch also is slowing success. Even venture-capital fund managers who helped fuel the 1980s business boom are pessimistic. Since 1987, the Small Business Administration (SBA) reports that new-venture capital declined from $4.2 billion to about $1.1 billion last year. (An exception is Fairview Capital, a new fund that plans to raise $250 million exclusively for minority businesses.) Additionally, despite low interest rates, banks are not eager to lend. The struggle to get c a pital, says John R. Winston, national assistant director for the Washington, D.C.-based Minority Business Development Agency (MBDA) "will be the thing that will keep most black business owners from making it. Bankers continue to redline, and they still have little, if any, faith in a minority's ability to weather these times."

But these aren't the only issues bothering small business owners. Many believe that business-related legislation--on issues such as health insurance and mainstreaming disabled workers--may trim profits. Additionally, entrepreneurs are waiting to see how the final report of the U.S. Commission on Minority Business Development will be received by Bush and Congress. (At press time, the president had not commented on the report.)

Recently, despite lip service regarding the promotion of minority business, the federal response has been reactive. For example, since the LA. riots, Bush allocated $600 million to rebuild small businesses and homes. And last June, Congress approved $500 million more for national summer youth employment programs and SBA loans.

The administration also called for creating urban enterprise zones in 300 areas nationwide. But not everyone is a fan of the concept. Some small business leaders fear that companies looking for tax havens stand to gain more from enterprise zones than community residents and entrepreneurs. "If these enterprise zones are just going to be window dressing, then they won't work," says Dolores C. Ratcliffe, founder and president of the Los Angeles-based Association of Black Women Entrepreneurs (ABWE). "Black businesses need assistance on multiple fronts."