New Delhi, 25 May, 2015 (ISSME): Small businesses do not need any introduction as it is known worldwide that they are the engines of economic growth and are the prime mover of industrial growth. Their importance has long been recognized for the economy of a nation. Small businesses not only hold a prominent place in an economy, but also are big deal in politics now.
Recognizing the above characteristics of small business, the 2016 Presidential Candidate Hillary Clinton intends to be the “Small Business President”. She is deeply concerned about the challenges that small businesses face in USA. Starting a new venture, accessing capital, getting opportunity to expand and reach and regulatory burdens are some of the chief issues that come in the way of growth of small businesses. Hence, revitalizing small businesses is high on her agenda and she would, thus, propose the four-point blueprint to better the situation for small businesses throughout her campaign during the 2016 presidential election. The four-point measures are as follows:
- Cutting red tape for ease of doing business: Currently, USA is ranked 7th as per Doing Business 2015 report of World Bank. As regards the ranking for starting a business, it is ranked 46th in the world. To cite another example, a 2014 Brookings Institution study finds a persistent decline in the new firm formation across a broad range of sectors in USA in the past few decades. The figure shown below gives a clear picture about the decline in entrepreneurship. To this end, Clinton says that there is an urgent need to slash the cumulative weight of regulations so that it should not take longer to start a business in USA than it does in Canada, Korea, or France.
- Expanding access to finance: Finance is the lifeblood for small businesses to diversify, grow and hire. Despite upturn in lending since the 2008 financial crisis, smallest firms and startups still find it hard to get the credit.
- Simplifying tax related matters: Small businesses pay much higher tax rates vis-a-vis big corporations due to their inability to take advantage of international tax strategies. In addition, it takes 150 hours and US$ 1,100 per employee on federal tax compliance for smallest business with only one to five employees, which is 20 times higher than average spending of a larger firm. These are the tax related issues that need to be dealt with prudently.
- Expanding access to new domestic and international markets: As expansion of small businesses to new markets means growth, the government should take all corrective measures to ensure small businesses’ access to new markets. (ISSME)