Despite Challenges, Local Entrepreneurs Are
More Confident in Their Local Economy Than Their Small Business
Counterparts Across the Country
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.
For an in-depth look at the attributes of the nation’s small
business owners, read the full spring 2015 Bank of America Small
Business Owner Report, and for additional Los Angeles-based
insights, download the Small Business Owner Report Los Angeles
infographic here.
About the Bank of America Small Business Owner ReportBraun
Research conducted the Bank of America Small Business Owner Report
survey by phone, from March 4, 2015, through March 27, 2015, on
behalf of Bank of America. Braun contacted a
nationally-representative sample of 1,000 small business owners in
the United States with annual revenue between $100,000 and
$4,999,999 and employing between 2 and 99 employees. In addition,
300 small business owners were also surveyed in each of nine target
markets: Los Angeles, Dallas, Washington, D.C., New York, Boston,
Chicago, San Francisco, Atlanta and Miami. The margin of error for
the national sample is +/- 3.1 percent; the margin of error for the
oversampled markets is +/ 5.7 percent, reported at a 95 percent
confidence level.
The Braun Research survey results conducted on behalf of Bank of
America and interpretations in this release are not intended, nor
implied, to be a substitute for the professional advice received
from a qualified accountant, attorney or financial advisor. Always
seek the advice of an accountant, attorney or financial advisor
with any questions you may have regarding the decisions you
undertake as a result of reviewing the information contained
herein. Nothing in this report should be construed as either advice
or legal opinion.
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Reporters May Contact:Colleen Haggerty, Bank of America,
1.213.621.7414colleen.haggerty@bankofamerica.com
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