Annual Report to the Congress on the State of Small Business


January 3, 1989


To the Congress of the United States:


This is the eighth and final report of my Administration on the state of small business. And it is my pleasure to report to the Congress that there has never been better opportunity in America to start a business, to grow and create new jobs, to research and generate new products and technologies, and to maintain America's economic expansion.


The report for 1988 details the number of new businesses, new jobs, and new investments made by small business. I am pleased and proud that we have 5 million more businesses than we did when I took office, that there are over 1.5 million new women-owned businesses in that time, and that small business has been the major contributor in generating the nearly 18 million new jobs added to our economy since 1982.


In 1988, the 6th year of economic expansion, industries dominated by small firms continued to lead in job creation. Over 350,000 businesses were incorporated in the first half of the year alone, and bankruptcy rates decreased significantly compared to 1987.


At the January 1981 Inaugural I spoke of heroes, not the people who are famous, but the people who every day risk their money, their time, and their reputation in the community, who work hard for themselves and their neighbors, whose day-to-day contributions sum up to national greatness. If we have a greater nation today, it is not only because of economic progress, but because of growth in opportunity.


Millions of Americans continue to convert opportunities to new enterprises, new jobs, and innovative products. And by taking advantage of the opportunities available to them, they create opportunities for other Americans.


Small business owners are effective leaders in other areas as well. Increasingly, the voices of small business men and women are heard in public policy debates. Their concerns reflect not the narrow views of special interest groups, but broad perspectives on issues that affect all of us -- the provision of health care for the uninsured, workplace literacy and training, and international competitiveness.


My Administration has listened to these small business owners. Many of their concerns will undoubtedly be the subject of discussion for some time to come. But in a number of specific instances, we have been able to target public and private resources and to alleviate regulatory, paperwork, or other burdens on small firms so that they will be free to do what they do best -- create new enterprises, new jobs, and innovative products and processes.


One of the recommendations of the 1986 White House Conference on Small Business delegates was that the Government do a better job of paying its bills on time. I heartily agreed with this recommendation, and the Prompt Payment Act Amendments of 1988, which I signed last October, will strengthen the rules Federal agencies must follow in paying their bills.


Another priority was to strengthen the national record of research and innovation, in which small firms play such an important role. I am very pleased that the Congress agreed with my strong recommendation to extend the research and experimentation tax credit and thus keep American products competitive in the world economy.


We as a Nation have much to learn from our small business leaders. Their creative contributions and those of many other citizens will be an important resource as we search for solutions appropriate to our Nation's needs in the 21st century.


Small firms will continue to have a broad impact on American society. They employ and train a majority of the Nation's new workers, and they will retrain many workers for new occupations in the years ahead. As we learn more about this vital sector's contributions to the economy, we will be able to shape policies at all levels of Government that will encourage the start-up and growth of America's vital small enterprises.


America's political liberty depends on economic liberty. I salute the small business community, whose strength supports our freedom.


Ronald Reagan


The White House,


January 3, 1989.