There’s a lot of current media attention on the extent of the recovery from the Great Recession. And indeed, numerous surveys are showing that employers are feeling more optimistic in 2016 than in recent years.
That’s good news – and bad news. It’s wonderful that business owners are more confident about the future, and we’re hopeful that their optimism is translated into business success. But it’s also concerning, because our elected officials may get the mistaken impression that optimism reflects a rosy business environment.
On May 25, California legislators can learn first about those issues when 90 small business owners are honored on California Small Business Day. Our policymakers should use that opportunity to move small business issues to the top of the legislative agenda.
What are some of the challenges that should be on the list?
Recent research from Dun & Bradstreet and Pepperdine University Graziadio School of Business and Management, based on a survey of small businesses owners across the nation, shows that one of the most important barometer of small business health – the ability to obtain capital to fuel operations – remains an obstacle to business growth. Among reasons for seeking upcoming financing, 32 percent of respondents said it was because they “expect worsening economic conditions” compared to 24 percent during the same time last year. When directly asked “is the current business financing environment restricting growth opportunities,” 58 percent said yes, up from 53 percent the same time last year. Half of all businesses surveyed also reported their ability to hire new employees was restricted, a four percent increase from the same time a year ago.
The California-specific results are even more startling. The Golden State’s small businesses report feeling that their growth opportunities are restricted (62 percent) and their ability to hire is restricted (58 percent), compared to the national averages of 55 percent and 50 percent respectively.
Why is this news so important?
First of all, California’s cost-of-living index was 134 percent of the national average in 2015. So businesses large and small – but especially small – are already fighting an uphill battle for their existence.
More importantly, if businesses can’t grow, they can’t hire more employees. Declines in employment are already disproportionately impacting small businesses. According to the SBA, in 2007 California boasted about 1.1 million small businesses with employees, but by 2012, that number had declined to about 638,000.
This ripple effect is felt in every segment of our society. Constrained businesses can’t rent more office space. Less capital means fewer people can purchase homes, rent apartments, buy goods, and spend dollars locally. That’s lower local and state revenues, and fewer available resources to fund public services to schools, public service such as police and fire, roads and infrastructure.
Informing policymakers about the barriers that inhibit our recovery from the recession– and advocating for the necessary steps to support small business — is a key goal of small business owners. Let’s hope when the state budget is passed and the Legislature adjourns in August, there is real progress for the businesses that employ the largest number of Californians.
Betty Jo Toccoli is president of the California Small Business Association.