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Survey reveals strengths, weaknesses of San Diego's business environment

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Local company Catalyst Advancement, in partnership with Point Loma Nazarene University, recently completed a San Diego Small Business Survey in order to bring attention to small businesses and help the local community recognize how to better serve their needs.

Defined as employing 100 people or less, small businesses in San Diego account for well over 100,000 companies. Fifty-three percent of those companies employee less than four people.

According to the study, the typical San Diego small business owner tends to have several key characteristics. Education and experience appear to be important to their success, with 69 percent having attained at least a bachelor's degree and the same percentage having at least 20 years of work experience.

Retirement is a key area of concern for many business owners, with 62 percent having either no retirement plan or feeling that their plan needs improvement.

In the past year, health insurance premiums have increased for 82 percent of the companies; workers' compensation premiums went up for 70 percent of the companies and 71 percent experienced an increase in office rent.

When asked about state, county and city taxes and fees, 51 percent of companies believe the taxes and fees are unreasonable or out of control and create a financial burden for their company. Respondents who feel that taxes and fees are unreasonable are 10 percent more likely to leave San Diego.

On the positive side, 79 percent of businesses are confident or hopeful about the economy, while only 20 percent are uneasy or concerned. Over 65 percent say their profits and customer base will increase, while 23 percent say their profits and customer base will remain the same. Less than 10 percent say their profits, customer base or number of employees will decrease.

Eighty-seven percent of small businesses operate on less than $5 million in revenue and 51 percent have profits less than 10 percent of revenue. However, considering the vast number of small businesses in San Diego, they are a major contributor to the local economy.

Small businesses typically offer fair compensation, flexibility and ownership in the company in order to more effectively compete with large organizations. Employee benefits are offered by 73 percent of small businesses. When asked about work/life balance, an impressive 81 percent of the small business owner respondents are satisfied.

Of the participants, 37 percent of companies have the business classification of corporation and 31 percent are sole proprietorships. Only 14 percent of the small businesses that responded are just starting out, having been in existence for less than three years. Most (66 percent) have been around for at least nine years.

Companies that have been in business for a longer period of time are less likely to start another business here. Industries most likely to start another business in San Diego are hospitality and entertainment, biotech and pharmaceuticals, and computer software and services. The majority -- 91 percent -- of businesses surveyed plan to stay in San Diego in the near future.

Of all business-related activities, the most time is allocated to sales and customer service (35 percent), with planning and business development a close second (27 percent). However, the younger the business or the business owner, the more time they dedicate to planning.

When expertise from outside the company is necessary, payroll (45 percent of businesses), Web design (42 percent of businesses) and accounting (36 percent of businesses) are outsourced more often than any other activities.

The most popular employee training focused on tangible skills: professional and technical training. Forty-two percent of companies, however, did not invest in employee development activities at all. The more profit a company has, the more likely that they will invest in employee development activities.

The San Diego Small Business Survey included well over 200 companies and encompassed a representative sample of small businesses in San Diego in regards to size, industry, classification and revenue.

Data collection methods included cold calling, mass mailing and a variety of professional contacts. The survey targeted various areas and industries in order to obtain a broad overview of the needs and challenges of small businesses.

Catalyst Advancement specializes in the creation and delivery of customized solutions in organizational culture and values development, strategic planning, change facilitation, leadership development, team building and performance management.

Catalyst Advancement will launch its San Diego Business Development Forums program this spring, where companies participate in intensive team sessions to develop, structure and grow their businesses with a deeper understanding of the long term impact of their business philosophies, strategies and actions.

Hokkanen is the principal partner at Catalyst Advancement. For more information, call (858) 547-0140 or send e-mail to info@catadv.com.>

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