News Column

Small Businesses Still Struggling in California

April 26, 2013

Staff Reports --

Hispanic small-business owner

Despite an improving economic outlook and a balanced budget in California, small-business owners continue to struggle in the Golden State. More than three-quarters (77 percent) report cash-flow problems, compared to 53 percent last fall and 59 percent nationwide, according to a new survey.

The twice-yearly American Express OPEN Small Business Monitor also reported that less than half (47 percent) of small California businesses offer health-care benefits to their employees, compared to more than three-quarters (76 percent) last fall. That still beats the national rate, though, which came in at 45 percent.

"The cash flow issues are the result of dismal economic growth," said Juan Solana, chief economist at HispanicBusiness Inc. He cited a growth rate of 0.4 percent in the fourth quarter of 2012 and a 2.5 percent growth rate in the first quarter of 2013, when a 3.2 percent growth rate was expected.

"This impact on demand and revenues is compounded by more limited resources and assets to tap into, four years of mild recovery, and a monetary expansion that has not reached many small businesses in terms of improving access to capital," Solana said.

More than half (57 percent) of small-business owners in California have a positive outlook on business prospects compared to 54 percent nationwide, according to the survey, yet have a decidedly gloomy take on the economic recovery, with less than one-quarter (23 percent) believing that the economy is indeed recovering. Nearly one-third (32 percent) nationwide believe the economy is on its way up.

Not surprisingly, nearly three-quarters (72 percent) of California small-business owners are stressed out about the economy, compared to two-thirds (64 percent) nationwide. One-quarter of small businesses in California are viewed as "sinking ships" by their owners -- yet nearly one-quarter (24 percent) are in good enough shape to offer raises this year.

On the other hand, California small businesses have a much greater expectation of higher sales during the next six months compared to last year, at 49 percent compared to a national rate of 38 percent, and an overwhelming 94 percent contribute to their local community by shopping locally at independently owned businesses, donating to local causes or participating in community projects.

Significantly, almost all of them (86 percent) report being happy with their lives.

Why so happy? Because they're entrepreneurs (81 percent).

American Express OPEN Small Business Monitor, released each spring and fall, is based on a nationally representative sample of 933 small business owners and managers of companies with fewer than 100 employees. The anonymous survey was conducted via telephone by Echo Research Feb. 22-March 12, 2013. The poll has a margin of error of 3.2 percent.

For more stories on small businesses and entrepreneurs, please see HispanicBusiness' Entrepreneur Channel

Source: (c) 2013. All rights reserved.

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