California’s economy has replaced workers comp insurance as the No. 1 challenge facing small businesses, according to new survey by Union Bank of California.
Barely half (52%) of respondents believe their businesses will be more profitable in 2008,
a 15 percentage point decline from last year. Half expect higher revenues, a 12 point decline.
That’s a significant drop for a group of people who traditionally are optimistic. Their wariness is causing them to hold the line on spending for new staff and new equipment and buildings.
Only one in four plans to add jobs, a 7 point decline from 2007. Only 5 percent expect layoffs, but 10 percent laid off workers in 2007.
“This annual survey is an excellent barometer of issues facing small-business owners,” said Masa Tanaka, Union Bank’s president and chief executive. “While the group surveyed has become increasingly concerned about California’s economy, a majority still expects an increase in profits in 2008.
The annual survey was of almost 2,000 owners of businesses with annual revenues of less than $15 million.
Other findings:
- 50% have seen no impact from the subprime mortgage crisis (of those who have seen an impact, most are in Riverside and San Bernardino counties)
- 28% think opportunity for growth is the No. 1 advantage of doing business in California, despite worries about the economy. (This is faint praise - No. 2 advantage is being near family and No. 3 is climate. Not a huge recommendation for the state.)
- 55% don’t offer health insurance, up from 52% in 2007
