The FINANCIAL — Seven years after the Great Recession, 60 percent of Los Angeles small business owners report their businesses are still recovering, according to the spring 2015 Bank of America Small Business Owner Report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in Los Angeles and around the country.
Though many are still in the process of recovering, Los Angeles small business owners are far more optimistic about the economy, business growth, revenue expectations and hiring plans than they were a year ago, based on survey results.
“Small business owners in Los Angeles are resilient, hardworking and optimistic,” said Troy Bosch, Los Angeles small business banker manager at Bank of America. “Their tenacity continues to help in the recovery of their businesses, as well as supporting the growth of Los Angeles communities.”
According to survey results, approximately 61 percent of Los Angeles small business owners are confident that the local economy will improve over the next year; this is up 8 percent from spring 2014 and is the highest of all markets surveyed and also higher than the national average (49 percent). Los Angeles small business owners are also more confident about growth in the national economy (57 percent, versus 46 percent in spring 2014 and 48 percent nationally), and the global economy (42 percent, versus 33 percent in spring 2014 and 35 percent nationally).
Los Angeles entrepreneurs also feel positive about the future of their businesses. Survey results indicate that more than two-thirds (67 percent) of Los Angeles small business owners plan to grow their business over the next five years, up 9 percent from last spring. In addition, 63 percent of local entrepreneurs expect an increase in revenue over the next 12 months, compared to 57 percent one year ago.
When looking at staffing, nearly half of Los Angeles entrepreneurs (48 percent) say they expect to hire more employees this year, up 7 percent from those surveyed one year ago. This is a higher number than counterparts in San Francisco (40 percent). Despite these hiring projections, the majority (51 percent) of Los Angeles small business owners say that it’s difficult to find qualified candidates, which is 10 percent higher than the national average. They say the top challenges in finding qualified staff are attributed to a skills gap (63 percent) and high salary demands (49 percent).
Los Angeles small business owners demonstrate self-sacrifice; prioritize employees and customers
Los Angeles small business owners are prioritizing the needs of customers and employees before their own. The survey reveals that 62 percent of local entrepreneurs would rather delay or reduce their own compensation than take other courses of action to make ends meet; this includes delaying or reducing compensation for their staff (10 percent) or scaling back on the services they offer customers (9 percent). Nearly half (47 percent) report that they have never given themselves a raise, or haven’t done so in more than two years.
Almost all (94 percent) of Los Angeles small business owners have employee appreciation programs, including:
Dinners and outings (46 percent).
Spot bonuses (41 percent).
Office recognition (37 percent).
Extra time off (37 percent).
They also provide a number of benefits for employees, including:
Flexible hours (57 percent).
Office closure on major holidays (45 percent).
Salary bonuses (45 percent).
The majority (51 percent) of Los Angeles small business owners cite that establishing relationships with customers and clients is the primary driver of repeat business, and they find many ways to show their appreciation, including:
Personalized gifts (35 percent).
Referral programs (32 percent).
Free products or services for their first visit (31 percent).
Additionally, 63 percent say a primary way in which they have adapted to customer demands is by becoming more technologically savvy (62 percent nationally), and 43 percent have expanded product and service offerings that cater to a younger client base (41 percent nationally).
Los Angeles entrepreneurs appreciate support from local community and policymakers
Los Angeles small business owners overwhelmingly support other local small businesses in the community by shopping small. Seventy percent of Los Angeles small business owners gave themselves an “A” or “B” grade for shopping at other local small businesses, which is six points higher than the national average, based on survey results. They also rate their local community high in shopping small, as 66 percent handed out an “A” or “B” grade when assessing how well Los Angeles residents frequent local small businesses.
In addition to feeling supported by their local community, 39 percent of Los Angeles entrepreneurs believe that policymakers appreciate small business owners, (30 percent nationally).
When asked about the impact of specific government policies, Los Angeles small business owners say the greatest potential for a positive impact on their business could come from expanded tax breaks for automatically enrolling employees into retirement savings accounts (34 percent) and incentives to keep jobs on U.S. soil (31 percent). Conversely, the policies that would have the most negative impact on their business would be required health care plans for employees (34 percent) and an increased minimum wage (28 percent).
Effectiveness of U.S. government leaders and health care costs are top concerns for Los Angeles small business owners
Although overall economic confidence is running high, Los Angeles entrepreneurs still have concerns over specific issues. Among the categories surveyed, the effectiveness of U.S. government leaders (70 percent) is the number one concern among Los Angeles small business owners, followed closely by health care costs (64 percent). Sixty percent also cite corporate tax rates as a top concern.
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