21% of small businesses on brink

March 12, 2010


A report released last week showed that 21 percent of California small businesses believe they will fold in the next three years. The annual survey, conducted by advocacy group Small Business California, revealed low confidence in the state’s business and political climate among business owners.

“That 21-percent figure is particularly shocking,” says Hauge, who also owns a small insurance firm. “That should be unsettling for policymakers.”

Other research confirms this trend. According to analysts at Equifax, a credit firm, bankruptcies among small businesses in California have increased 81 percent since last year.

Small Business California has conducted the survey since 2005. That year, 68 percent of respondents said California on the “wrong track.” This year, it was 83 percent. Those who believed that the business climate may improve over the next few years also sank this year — from 59 percent in 2009 to 37 percent — and 33 percent of respondents said that neither political party represented their interests.

According to the federal Small Business Administration, small businesses account for more than 60 percent of job creation in the United States every year. It estimates that are 3 million small businesses in California, two-thirds of which are sole proprietors.

Hauge noted one positive figure — that 24 percent of survey respondents said they would be hiring in the next year. The Bay Area Council, another business group, released similar numbers last week.

Small Business California received widespread criticism from its peers in 2006, when it supported the passage of AB 32, California’s major climate change bill. Hauge confirms that it was the only small business group in the state to do so.

“The Air Resources Board has not done a good job putting in mechanisms for small businesses to provide input,” Hauge says. “Still, we have confidence there is a lot of potential for job creation in AB 32.”

The Small Business Roundtable, a similar group that opposed AB 32, was not available for comment.

The cost of regulations to small business has been widely debated in California. The national Small Business Administration reported last year that small firms spend 45 percent more per employee than large firms to comply with federal regulations. More than half of that amount — roughly $3,296 per employee — is targeted at environmental programs, specifically. In 2006, during the lead-up to AB 32’s passage, commerce groups reported that the bill would cost $77 billion in lost revenue for small businesses.

Hauge’s views may be unorthodox for a small business advocate, but like his peers, he remains concerned about Sacramento’s role in regulating business.

“There is a lot of misinformation about AB 32, but it is not the only program to criticize,” he says. “Most bills go without a solid economic impact report. The state has got to do something to reign in regulations, and to make sure that they make sense.”


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  1. Tee
    Tee 12 March, 2010, 14:19

    Poorly written. No explanation of AB32. Obviously biased toward Republican interests. Reign in regulation? That’s was Bushco did for bankers and financiers, and that is the very reason the economy has tumbled. This kind of political spinmaking is sickening and dangerous to our nation.

    Reply this comment
  2. John Seiler
    John Seiler 13 March, 2010, 00:37

    Tee is wrong. Bush was a massive *hyper*-regulator. Ever hear of Sarbanes-Oxley, which imposed massive, ridiculous new regulations on businesses?

    And how about horribly misnamed the USA PATRIOT Act, which imposed intrusive, massive new snooping regulations on businesses?

    Then there was Bush’s massive, controlling, Soviet prescription drug law.

    And, worst of all, Bush-Greenspan devalued the dollar by 75% against gold, injecting massive uncertainty into pricing.

    He was the most massively anti-business president since Nixon.

    Next to Bush, Obama massively looks like Reagan.

    — John Seiler

    Reply this comment
  3. EastBayLarry
    EastBayLarry 13 March, 2010, 08:56

    As somebody who has worked for small businesses for the past 10 years I can say that this acticle is spot on.

    The pressure on the businesses I worked for caused them to, 1) Sell themselves to larger businesses, 2) Accumulate extensive debt, eventually causing the business to close, 3) Outsource jobs to China cutting jobs in California.

    Reply this comment
  4. SanDiego Ron
    SanDiego Ron 19 March, 2010, 10:21

    As someone who is planning to close down my small business, this article is spot on. The regulations and the taxes are killing us, so we have decided to shut down at the end of this calendar year, and try to find other employment in the computer field.

    Reply this comment
  5. Brannslange
    Brannslange 19 March, 2010, 19:50

    Tee said: “That’s was Bushco did for bankers and financiers…”
    Liberal bastion of the East, the New York Times, on May 9, 2008 said: “President Bush has vowed to veto the (Barney)Frank (housing) bill if it reaches him in its present form, on the ground that it would assist lenders and borrowers who have acted irresponsibly.” What newspaper do they read on your planet, Tee?

    Reply this comment
  6. silversurfer
    silversurfer 20 March, 2010, 20:13

    I have resided here in California since 1965. I have clear memories as far back as 1970 when I was 7 years old. You know what….I distinctly remember that pretty much everybody got to wherever it was that they were going and we sure didn’t need 500 state agencies to get there!

    The California Air Resources Board and the California Integrated Waste Management Board represent only 2 of nearly 500 state agencies/boards yet those 2 budgets alone add up to $1,100,000000 annually (1.1 Billion Dollars). And for what? To be told how to run our gig by a bunch of control-freak, micro-managing, political class, wanna-be puppeteers who want us average, everyday private citizens to dance on the strings that they pull as if we were their marionette puppets?

    I’ve been gettin’ barreled from Point Conception to the Mexican border and beyond since 1979. You think I want these nanny-state type elected officials and appointed bureaucrats tellin’ me how to run my trip? Are you kidding me? I’m about a thousand times more radical than 90% of the people who think that they should be able to tell me how to live my life.

    Disband C.A.R.B., disband the “garbage board”, greatly reduce the California E.P.A. and the various AQMD’s as they are too redundant. There already exists a bloated Federal E.P.A. so why must each state have their own state E.P.A. with endless government union employees? I ain’t about payin’ the lifetime guaranteed pensions, higher salary structure, gold-plated heathcare benefits, and perks up the wazoo for the vast majority of state and federal gov’t employee union members…..I’d rather barely work and all and just surf instead.

    By the way, Californians already pay the highest state gasoline tax in America, the highest state sales tax in our U.S., the highest state income tax in our country, the highest state business tax west of the Mississippi, AS WELL AS hidden taxes such as one of the highest vehicle registration fees in America and some of the highest utility & electricity rates in our entire nation. And those in the political class, bureaucratic class, public sector want even more? Check it…..you ain’t gettin’ it from me. Capiche?

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