Thursday, October 6, 2011

California Small Businesses Describe Themselves as "Sinking Ships"

It's no secret that times are tough for California's small businesses these days. With Sacramento casually wiping out thousands of Amazon affiliates back in June, the state's stunning lapse to the back of the pack in business creation, a governor unwilling to push any job growth that doesn't involve public works projects or subsidies for solar and wind technology, and a business climate universally regarded as the worst in the country, the Golden State is a rough place to try to earn an independent living. Now, thanks to a new survey from the American Express OPEN Small Business Monitor, we're learning how rough.

According to the survey report, over a quarter (27%) of the 814 small business owners interviewed describe their firms as "sinking ships." While 55% say they have plans to expand in the coming year, this is down from 85% just six months ago. About half (51%) cite problems with cash flow; 38% offer health care benefits to their employees, down from 46% last year, and just 28% pay themselves an annual salary. Some 56% say the economy is still in a recession, while 68% see the risk of a double dip. Just 22% plan to hire in the next six months; the biggest barrier to hiring, according to respondents, is lack of consumer demand.

We don't have much to add to this, except to note how depressingly familiar these survey results are becoming. This story reminded us of another one, a couple weeks ago, in which shop owners in the garment district of Los Angeles opined that business tax credits aren't really going to help them much. The simple fact of the matter is that small business owners in California face a maze of state and local regulations, as well as licensing fees, and these show no signs of going away. And with no one talking about letting the state's weary taxpayers keep more of their money, consumer demand isn't likely to pick up any time soon.

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