How Much Room Is There for New Businesses?

Main StreetDo you want to be your own boss when you return to civilian life? In a poll taken by the Army about one out of every nine GI’s questioned said “Yes.” If the answers were given after serious thought and if the fraction is even roughly right, then possibly close to a million of you intend to try, or at least would like to try to launch your own business boat on the ocean of private enterprise or to relaunch the boat you put away in the shed before you joined the Army.

This is a mighty ambitious -plan for each of you and for the country at large. If you carry it out, you are going to make the water seem unusually crowded—as crowded as was the sea along the Normandy coast on D-Day. For when the war broke out there were about 10,000,000 people in the United States who were classified by the census taker as “employers or self-employed.” Over 6,000,000 of them were farmers, which left something over 3,000,000 to run all the other sorts of businesses, ranging from big factories down to one-man barbershops, family-operated retail stores, and doctors’ or dentists’ offices.

It is true that many of these nearly 10,000,000 farms and firms were closed by the war. You could see empty stores in any shopping street, boarded-up filling stations on many a corner, and abandoned diners or tourist camps alongside every highway. It is estimated that as many as 700,000 farms and 500,000 other businesses, mostly; small ones, shut down during the war. Their owners went into the armed services or a munitions plant. Some farmers could not carry on without their sons and could not get hired help. The filling station, repair shop, shoe or furniture store was not worth keeping open when rationing reduced the sales of some goods or when other kinds ceased to be produced.

Will they all come back to life?

These businesses may be reopened now that peace has returned, though we cannot be sure that all of them will. Some “temporary” wartime changes have a way of becoming permanent. We had some illustrations of that in the first World War. Perhaps similar things may happen this time; we never wholly return to the old ways of prewar life. We may discover that we can get along without so many filling stations or retail stores.

Even if all the old businesses came back, they would absorb only part of the million or more business-minded veterans. Some of them would be opened or reopened by men who have been doing civilian war work. If most of the returning business-minded veterans wanted to start non-farming businesses, they would raise the number of such firms from 3,300,000 to possibly 4,000,000. And if, as seems probable, most of them could start out only in a small way, with no hired help, they might double the number of one-man or family businesses—apart from farms—that were in existence in 1941.

Some will get trampled in the rush

Such large increases in the number of enterprises obviously would lead to uncomfortable overcrowding, to overkeen competition, to disappointment and failure for many. It is necessary to start our discussion on this note of warning because there is very strong inclination in the country to give you a chance to fulfill your ambitions and to help you in every way to succeed. The Army is preparing or has already prepared many detailed and practical guides, showing the qualifications that, are needed for starting and conducting different kinds of enterprises. You can get these from the appropriate officer in your unit.

The GI Bill of Rights passed by Congress is intended to help you borrow money as an individual or as one of a group of partners, and to get whatever training will be useful. The Surplus Property Act of 1944 provides for the disposal of surplus materials in ways intended among other things, to make it easy for veterans to get equipment and materials for their own small businesses. Originally set up in 1942 to help small manufacturing concerns play their part in war production, the Smaller War Plants Corporation was later assigned part of the task of helping small businesses in the reconversion process. The SWPC went out of existence in January 1946, but its small business assistance, lending, and surplus disposal functions are now taken care of by the Department of Commerce and the Reconstruction Finance Corporation. In these and other ways there is evidence of the desire to help you to make a success of any enterprise on which you may decide to embark.

There is, of course, another and less praiseworthy reason for sounding a note of caution. When you get back it is safe to assume that there will be an ample supply of sharpers waiting to welcome you. They will use a variety of ingenious devices—some as old as the hills, some new arid streamlined—to separate you from your money or to run you into a hefty debt. They will dangle the prospect of a profitable small business before your eyes. They will have just the right piece of land, building, machinery, stocks, store, or just plain ideas to sell you at bargain prices, and you may be sure their sales talk will be smooth and shiny. All this eagerness—honest or dishonest—to extend a helping hand ought to make you lean backward and keep your hands in your pockets until you have made up your mind on three fundamental questions:

  1. What would I really like to do?
  2. Have I the qualifications that are required?
  3. Has some community room and need for one more business of the sort I would like to run?

The sobering truth

All the enthusiastic helpfulness of Congress, of your own state, and of your home town, and all the eloquent speeches about the glories of “free enterprise,” the “American way of life,” or the virtues and value of small businesses cannot wipe out the hard facts of business experience. That experience shows that the average life of all businesses in the United States is a little over five years in length. Out of every six new ones born, two die in their first year. Only three of the six celebrate their second birthday, and the smaller the babe at birth the less may be its chances of survival.

If you are a natural optimist, it is wise to remember that the records of business are not all written in black ink. If you are a pessimist by inclination, please note however that they are not all written in red. But whichever you are, it is well to realize that no matter what your ability, training, resources, and determination, success may depend on choosing a field where there is room for the small beginner, and on the general trend and behavior of our American economy.

Business—all sizes and shapes

Our first task is to look over the field of business and see where there are chances for a man to get a footing. At a casual first glance we may feel that there is no chance, since the business world seems to be dominated by giants. The huge corporation with its millions of capital and thousands of employees towers up above the landscape much as the Empire State Building does over New York City. Standard Oil, General Motors, U. S. Steel, American Telegraph and. Telephone, Ford, Woolworth, Armour, Goodyear, International Harvester, General Electric, R.C.A., the Pennsylvania Railroad—we know these names and another dozen almost as well as we know the names of the forty-eight states. Among them they seem to cover a large slice of American enterprise.

As a matter of fact they do. In 1943 it was calculated that only 250 of the 75,000 corporations in the United States controlled about 60 percent of the total corporate assets. The same sort of thing could be found in other countries as well, for the growth of gigantic enterprises has been a world-wide feature of the last fifty or hundred years.

Yet a large slice is not by any means the whole loaf. Or to say it another way, American business is not all conducted in eighty-floored skyscrapers. Some of it is run in buildings with only twenty floors, and a great part of it manages to get along in one- or two-story quarters or even in sheds. There is every conceivable grade of middle-sized business and every range of small business, down to the one-man or family firm.

Many of the small firms remain small, but some of them grow to be middle-sized or large. Some of the middle-sized businesses operate permanently and successfully on that scale, while others shrink or expand. The important fact is that there seems to be plenty of room for enterprises of all sizes and shapes at some point in our workaday world.