Small business looks ahead - with caution

Miles from the limelight of Wall Street and corporate America, the nation's millions of small businesses are busy thinking ahead - trying to survive. Even though the stock market continues booming along, many small firm owners who were optimistic when 1986 began have begun to retrench in preparation for hard times.

``Managers of small business were very much affected by the 1980 to 1982 slowdown,'' says William Dunkelberg, professor of management at Purdue University. ``They've never really gotten over it.''

Professor Dunkelberg says the businesses he has contact with frequently have fewer than 40 employees and sales range from less than $100,000 to $3 million a year.

Owners of these firms, Dunkelberg says, have become conservative because they see a minefield of problems ahead requiring delicate and deft administration of economic policy to negotiate.

Dunkelberg's most recent poll of 8,000 small businesses indicate:

Capital spending among small businesses remains at low levels.

Expectations of hiring more employees are much lower now than at the beginning of the year.

Firms are recording record low inventories and continuing to press to keep them as low as possible.

Twenty-nine percent of the firms polled at the beginning of the year thought it was a good time to expand. Recently, only 14 percent favored expansion.

``In terms of their thinking,'' he says, ``small business owners don't believe we've dealt with the trade problems or the budget deficit. As far as they're concerned, it's only a matter of time until they get hit again. They're thinking: `My gosh, I barely made it through that time - I'm going to buckle under and make it through this time too.'''