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Kauffman Smallbiz Expert On Taxes, Fiscal Cliff

A. Yes, in some sectors. Take retail. There's the Wal-Mart effect â¿¿ you've seen huge consolidation in retail. You've seen a huge consolidation in the information technology sector. We've sort of entered a "you eat or be eaten" atmosphere. Investment banks and especially the (stock) markets in the retail and information technology sectors simply aren't welcoming anymore toward small innovative companies. You either have to get big fast by being an acquirer or you have to be acquired.

Look at the employment distribution over the last 20 years. The percent of employment in giant companies â¿¿ those with 10,000 or more employees â¿¿ has risen and it's correspondingly falling in small businesses. That's obviously points toward something.

Q. Are you saying that the climate for small business is more hostile than it was?

A. It's not necessarily hostile. It depends on your company. If you're going to start a retail company, it's sort of hard to compete against Wal-Mart. By the same token, in certain sectors â¿¿ Internet, digital media, software â¿¿ there has never been a better time to start a company. The supply of venture capital is outstandingly high. It's cheap, incredibly cheap, now to start a company in that sector.

You're seeing a squeeze on small companies in sectors like retail and restaurants, unless you're high-end, luxury, boutique kind of stuff.

At the same time, there's a potential flourishing, a best of times for entrepreneurs and small business. This is a transition and it's going to take some time to get there. We're sort of at the beginning of a new type of entrepreneurial rebirth in sectors such as manufacturing in things such as artisanal products.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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