Despite the optimism, nearly half of the respondents stated California's current economic climate is one of their key concerns, and about a third commented that rising health care costs and state and local business regulations are additional pressing challenges for their business.
Issues surrounding workers' compensation and healthcare insurance continue to be a chief concern of most small-business owners: 65% of businesses polled identified the rising cost of workers' compensation insurance as one of their top challenges of owning a business in California. And of the 52% currently offering health benefits to employees, 21% said they shifted a higher portion of healthcare costs to their employees last year; 12% reduced health benefits.
"The survey's results show that small-business owners are becoming more optimistic about the national and state economies rebounding," says Union Bank of California senior economist Keitaro Matsuda. "Despite the fact that the state's economy is still the second greatest concern among California small-business owners, almost half of the respondents are making plans to invest in land, buildings, equipment and inventory, showing they anticipate an increased demand for services and products. But in order to keep small business owners in the state, the rising cost of workers'compensation insurance and healthcare coverage must be addressed."
For the survey, small businesses were defined as California companies in operation for at least two years, with annual sales under $5 million for the fiscal year 2003. About 59% of business owners surveyed reported greater sales in the fourth quarter of 2003 over the same period in 2002, with 24% reporting the same sales and 17% with lower sales. In addition, 44% of respondents have capital expenditure plans in 2004, and of those, 70% plan to spend more than they did in 2003.
With regard to technology, 58% of respondents purchased or upgraded technology applications for their businesses, and of those, 35% spent more than $10,000 in 2003. With regard to retirement, less than one third of respondents said they offer their employees a 401(k) plan or employee stock ownership plan.
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