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East County Magazine News Service
October 10, 2011 (San Diego’s East County)--Slightly more than half of California-based businesses (55%) plan on growing their companies in 2011, but 27% describe their business as a “sinking ship” according to the just-released American Express OPEN Small Business Monitor, a semi-annual survey, now in its tenth year. The Monitor also reports that fewer small firms in California offer healthcare benefits to their employees (33% versus 46% in 2010). Meanwhile, optimism remains high in the state as 72 % of entrepreneurs see ‘the glass’ as half-full and almost half of them will make capital investments (48%), up from 39% in 2010.
Other noteworthy California highlights include:
- 51% report cash flow issues, down dramatically from the spring 2011 (72%)
- 48 % will make capital investments over the next six months, up from last fall (39%)
- 38 % offer healthcare benefits to employees, down from last fall (46%)
- 27% describe their businesses as a “sinking ship”
- 28 % pay themselves an annual salary. A smaller number than, either business owners in the West (33%) or overall (44%)
- Those that do pay themselves earn an average annual salary of $57,500 per year
The American Express OPEN Small Business Monitor, released each spring and fall since 2002, is based on a nationally representative sample of small business owners/managers of companies with fewer than 100 employees.
Noteworthy California business owner highlights are as follows:
- 55 % plan to grow their businesses over the next six months, down significantly from last fall (85%)
- 72 % see “the glass” as half-full and consider themselves to be optimistic, down significantly from spring 2010 (85%)
- 51% report cash flow issues, down dramatically from the spring 2011 (72%).
- 48 % will make capital investments over the next six months, up from last fall (39%)
- 38 % offer healthcare benefits to employees, down from last fall (46%)
- 27% describe their businesses as a “sinking ship”
- 28 % pay themselves an annual salary. A smaller number than, either business owners in the West (33%) or overall (44%)
- Those that do pay themselves earn an average annual salary of $57,500 per year
Business Outlook and Managing the Economy
According to the Monitor, California business owners are somewhat more likely to have a positive outlook for their business prospects over the next six months (58%), when compared with their counterparts across the West (54%) and compared to last fall (54%). Seventy-two % of business owners see “the glass” as half-full and consider themselves to be optimistic, down significantly from spring 2010 (85%).
Given their business performance over the last three months, more than half of California business owners (56%) would say we are still in recession, nearly three-in-10 (27%) say the economy is stagnant and seventeen % say we are recovering. Nearly seven-in-10 (68%) think the economy is at risk of a double dip recession. Nearly six-in-10 (58%) think the U.S. government’s credit rating is important to the health of the small business economy. More than six-in-10 (61%) of California business owners say the economy stresses them out.
More than four-in-10 California entrepreneurs (45%), when describing the impact of the economy on their businesses, say they are “staying afloat,” and their business is managing to survive despite being negatively affected by the economy. More than one-in-four business owners (27%) describe their businesses as a “sinking ship” with the survival of their firms in jeopardy. One-in-four California business owners (24%) said the economy had not adversely affected their companies or they have grown their firms in the rough economy.
When entrepreneurs were asked what is the most important thing they do to stay motivated in the uncertain economy, the largest number responded “make plans for the future, stay busy and remain focused on what lies ahead” (23%), followed by “focus on work” (22%), “be positive, hope for things to get better, stay positive” (12%), “spend time with family” or “exercise” round out the top five most popular activities, (each 8%).
Less than three-in-10 California business owners (28%) pay themselves an annual salary. A smaller number than, either business owners in the West (33%) or overall (44%). Those that do pay themselves earn an average annual salary of $57,500 per year.
Boosting Customer Demand
More than half of business owners (55%) plan to grow their businesses over the next six months, down significantly from last fall (85%). More than one-third of California entrepreneurs (35%) say the biggest challenge to growing their business is the rising costs of doing business. Nearly half of California business owners (47%) surveyed say increased customer demand will help them grow their business, followed by tax cuts (19%), access to capital (15%), and the ability to hire more staff (9%).
More than one-in-five (22%) California business owners have tapped international markets as a way to increase customer demand. In an effort to connect more closely with customers entrepreneurs solicit customer feedback by regularly talking to customers about what they think (68%), using social media (9%) or using local review sites like Yelp! and Citysearch (8%). Once they have garnered feedback entrepreneurs will use it to improve customer service (63%), modify products or services (62%), to make personnel decisions (41%) or introduce new products or services (37%).
Hiring Plans and Employees
More than one-in-five California business owners (22%) are planning to hire within the next six months, a smaller number than business owners overall (31%) but on par with last fall (21%). The biggest barrier to adding more employees is the lack of customer demand (35%). Thirty-two % of business owners say they do not need to hire in order to grow their businesses.
When asked if their employees needs’ come before customers’ needs, thirty-nine % of California entrepreneurs agreed employees come first. A majority (88%) say their employees are well or fairly paid for the job they do. Two-thirds of California bosses say morale has stayed the same over the past six months (66%). More than one-in-10 say it has improved (14%) or say it has gotten worse (15%).
According to business owners in California the best way to show appreciation for employees hard work, other than a raise or bonus, is to say “thank you” when they do a good job (23%), followed by giving gift cards (15%), providing work life balance (12%), giving time off (10%), giving good benefits (9%) and giving food/meals (3%). Thirty-eight % of California entrepreneurs offer healthcare benefits to employees, down from last fall (46%). Nearly two-thirds of employers in California (63%) are not concerned their employees will leave their company for another job when the economy turns around.
Addressing Cash Flow Issues
Over half (51%) of California business owners report having cash flow issues (on par with 52% last fall, down dramatically from this spring (72%). One in four entrepreneurs cite their ability to pay bills on time as their biggest concern (24%), followed at a distance by accounts receivable (9%), the ability to meet payroll (8%), having enough cash to win new business (7%), and the ability to accurately track cash flow (4%).
Investments in the Company
Nearly half of California business owners (48%) will make capital investments over the next six months, up from last fall (39%). For California entrepreneurs technology investments lead the category (35%). Additional investments include office equipment (22%), manufacturing/production equipment (16%), office furnishings (2%) and real estate investments (1%).
More than half of California entrepreneurs (54%) feel confident they can access the capital they need to grow their businesses.
Social Media Usage
Among the nearly half of California business owners (49%) who use social media to attract new customers, the greatest number are using Facebook (25%) followed by Twitter (16%), blogs (7%), YouTube (3%), Four Square and LinkedIn (each, 2%)and MySpace (1%).
Nearly three-in-10 business owners (29%) say their company’s social media presence is an extension of what they do everyday when they connect with customers. One-in-five business owners (21%) say social media has helped their business survive in a challenging economy. A much larger number, (55%) say social Media is a “time-suck” or burden. Nearly six-in-10 (58%) of entrepreneurs say it is better to forgo a social media presence than do it poorly.
In terms of their grasp of social media, more than four-in-10 California entrepreneurs (42%) would describe themselves as a “newbie” having a little bit of knowledge about social media. Nearly one-third (32%) say they are a “zero” and have no idea how to use social media and a much smaller number (14%) consider themselves a social media “maven”, that is they are very adept at using social media.
In 2011, nearly three-in-10 (28%) California entrepreneurs will spend marketing money on search or social media advertising. On average they will spend $2,000, a higher amount of marketing dollars then counterparts in the West ($1,800) or overall ($1,600). Nearly two-thirds of entrepreneurs (65%) take primary responsibility for managing current online marketing campaigns and handle it themselves rather than outsource it or have a staff member or marketing manager take responsibility.
Survey Methodology
American Express OPEN Small Business Monitor, released each spring and fall, is based on a nationally representative sample of 814 small business owners/managers of companies with fewer than 100 employees. The anonymous survey was conducted via telephone by Echo Research from August 12- September 8, 2011. The poll has a margin of error of +/- 3.4%.
States within the West include Montana, Wyoming, Idaho, Nevada, Utah, Colorado, Arizona, New Mexico, Washington, Oregon and California.
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