by Vince Vasquez
Friday, March 26, 2010
New polling data reveals that San Diego's small business community have struggled in a bleak economic climate since 2009, and aren't tilting towards expansion. However, if more business-friendly partnerships are developed in our region, the prospects for new growth and job creation may change dramatically in the near future.
In focus is Union Bank’s 10th Annual Small Business Survey for California. The survey, which was conducted from January 11-29 and interviewed 2,541 small business owners throughout the state, collected data in the San Diego region that should be of interest to local policymakers grappling with record unemployment levels. From the 504 small business owners in San Diego County that were surveyed, a clear profile emerges of a community that is forward-looking, fiscally disciplined, and making the tough decisions to operate in the black.
San Diego small business owners, like those found throughout the state, have been profoundly affected by our national economic turmoil; nearly half (48%) reported a year-to-year decrease in sales activity in 2009. Most owners undertook serious belt-tightening measures to tread water last year - a healthy majority (56%) acknowledged cutting their operating costs, while slightly less than a third (30%) reported reducing their debt. However, despite a deluge of bad financial news, and significant sacrifice and cost-cutting, it appears that most county businessmen and women are expecting to see the end of the rainbow this year.
Union Bank pollsters found that a new majority (51%) of local small business owners believe that 2010 will be the beginning of an economic recovery, and 56% expect 2010 to be generally a more profitable year for their business, a higher percentage of optimism than that found in statewide owners (51%). To be sure, most are taking a cautious, conservative approach to their bottom line this year – 64% intend to keep capital expenditures at 2009 levels, and 69% expect to maintain the same staffing levels. But true confidence is witnessed in the overwhelming number of businesses who don't expect to be handing out pink slips this year - 95% of San Diego small business owners do not anticipate layoffs in 2010.
Municipal data finds that the small business workforce is anything but trivial; in the City of San Diego alone there are approximately 92,362 registered small businesses which employ 119,341 people. From anecdotal evidence to the numbers in the survey, it's clear that San Diego small businesses value their employees, and go to lengths to retain them and provide competitive benefits - 56% offer paid vacation, 44% offer health care coverage to employees, and 42% offer flexible working arrangements for employees. Keeping (and adding) good, qualified employees requires businesses to have the financial power for growth and reinvestment, but most media outlets suggest that banks and other traditional lenders have turned off the borrowing spigot to today's entrepreneurs.
Not so, according to Leticia Aguilar, San Diego market president for Union Bank, who in a recent interview with this author firmly declared “we are growing and we are lending.” Aguilar characterized small business lending as “extremely important” to her institution, and noted that Union Bank has increased the number of SBA 504 loans from 166 loans worth $122 million 2008 to 214 loans valued at $153 million in 2009. Still, the survey found that 21% of San Diego small business owners were denied a loan or access to business credit last year, and 65% of those businesses were unable to find alternative financing. Aguilar stated that though some applicants do not qualify for their ideal loan, Union Bank positions itself as a partner for business success, and makes referrals to nine community-based organizations that can help restructure and re-educate non-qualified enterprises to become “bankable” in the immediate future.
It's reassuring to know that at least one major lender understands the value of a partnership approach to small business lending. When local entrepreneurs succeed, banks succeed, and our community is able preserve its unique quality of life. Bob Stoody, a survey respondent who owns an industrial supply house in Logan Heights, sees Union Bank as part of his “supply chain,” and a key advisor that has proven instrumental for his company's growth and future potential. However, when asked if government officials took the same advisory approach to his business, Stoody stated that regulatory agencies are too often oriented in a punitive, anti-business manner that is unhelpful in today's turbulent economy.
Hopefully, this won't be the case in the future, at least not in San Diego. In a recent news story segment by Channel 10 News, Mayor Jerry Sanders was quoted as saying he would find new ways to make San Diego a friendlier place for small businesses, and agreed to lobby on behalf of small business owners at the county and state level. Kudos to the Mayor for championing the cause of small business – San Diego City Hall needs more stand-up leaders willing to go to bat for everyday entrepreneurs. As Stoody noted, even small pro-active steps may provide enough of an incentive for business owners to “tip the scale” in the direction of job creation and corporate expansion, two activities which can also create greater tax revenue for local public services.
Small business owners are the backbone of our economy, and deserve greater support and understanding from City Hall, financial institutions, and every local decision maker. If critical reforms are taken in the coming months to advance the needs of job creators, every San Diegan will be one day closer to our long-awaited economic recovery.