This report contains findings and recommendations of a project to identify problems in California's policies and in the administration of its laws regarding small businesses and to examine alternative solutions to those problems. Part 1 consists of the findings of five statewide Task Forces that concentrated on these aspects of operating a small business in California: access to capital; taxation, regulation, and assistance; education, training, and technical assistance; commercial and industrial revitalization; and nontraditional small business. In part 2 is a set of recommended actions, selected and refined by an ad hoc State review panel from recommendations prepared by the Task Forces. Part 3 summarizes research findings about California small businesses. The research described here includes a study of small business's role in employment growth, California case studies, problems and prospects of nontraditional small business, literature summary and bibliography of urban small business development, and benefits and costs of extended supported work projects. Appendixes include complete lists of recommendations from each of the five Task Forces and listing of Task Force members. (YLB)