Small Business: Trouble on Main Street

January 28, 1983

Report Outline
Impact of the Recession
Problems and Opportunities
Business-Government Issues
Special Focus

Impact of the Recession

Increase in Bankruptcies and Failures

Within the next few weeks, President Reagan will send his annual report on “The State of Small Business” to Congress. The report will likely be as full of praise as the one sent to Congress last March, when Reagan described small business as the provider of “much of the growth in jobs and innovation as well as being the supplier of services and deliverer of goods to virtually every farm, village, town and city in our nation.” But the 1983 report will likely present a grayer portrait of the state of small business than last year's.

Business bankruptcies for 1982 totaled 65,657, up from 47,555 in 1981 and 43,374 in 1980, according to the Small Business Administration (SBA). Although there have been some highly publicized big business bankruptcies, such as Braniff Airlines, the fact that small businesses make up the vast majority of all businesses makes it safe to assume that they also make up the vast majority of business bankruptcies. The Dun & Bradstreet credit-rating service reported Jan. 20 that there were at least 25,343 business failures in 1982, up 48.7 percent from 1981. The situation appeared to be getting worse rather than better; failures from the second half of the year were up 21 percent over the first half.

These numbers may just be the tip of the iceberg. The business failures that turn up in these figures are generally those that result in a loss to creditors. But most business failures result in no loss to creditors; business owners pay off their debts, liquidate their assets and close their doors. “We have some rough estimates that suggest maybe 10 to 15 firms cease operations for every one we would see in the Dun & Bradstreet number,” said William C. Dunkelberg, chief economist for the National Federation of Independent Business (NFIB).

ISSUE TRACKER for Related Reports
Small Business
Jun. 19, 1987  Small Business
Jan. 28, 1983  Small Business: Trouble on Main Street
Oct. 23, 1957  Aid to Small Business
Aug. 24, 1955  Future of Small Business
Mar. 02, 1950  Financial Aid for Small Business
Mar. 21, 1945  Revival of Small Business
Mar. 04, 1942  Small Business and the War
Jul. 01, 1939  Government Loans to Small Business
Apr. 03, 1934  Small Business Under the N.R.A.
Economic Crises
Small Business