Small-business owners throughout the West Coast are the most optimistic they have been in four years, with a record-breaking 90 percent believing their businesses are headed in the right direction, according to an annual survey of small businesses conducted by Union Bank.
The survey found that 49 percent of respondents in San Diego believed that local business conditions will improve over the next two years, up 3 points from the previous year. Fifty-five percent of local respondents believe the state and national economies are headed in the right direction.
Nevertheless, only 10 percent plan to add new staffers this year, with 19 percent planning to increase their capital expenditures. In comparison, 4 percent plan to cut staff, with 23 percent planning to cut spending.
Todd Hollander, head of Union Bank's business banking division, said several factors were to blame for the continued sluggishness in hiring, ranging from health care costs to taxes.
"As the economy continues to strengthen, labor and capital budgets will likely grow," he said.
A survey of local businesses conducted last month by the Competitive Edge research firm found better results, with nearly 30 percent planning to hire new staff, compared with less than 3 percent who were planning layoffs.
More than 53 percent of the respondents expected business conditions to improve within the next six months and more than 54 percent thought their businesses would have a significant rise in revenue.
The differences between the two studies could be because Union Bank focuses specifically on small businesses and the Competitive Edge poll includes businesses of all size that belong to the San Diego, East County, Alpine, Escondido, Lakeside, Vista and Santee chambers of commerce.
“It’s promising for the year ahead to see businesses settle into 2015 with a continued and steady positive outlook,” said Dino D’Auria, executive vice president and chief banking officer at Silvergate Bank, which sponsors the Competitive Edge study on behalf of the San Diego Regional Chamber.
Throughout the West Coast, retailers were the most pessimistic industry, with more than half thinking the national and state economies were heading in the wrong direction, according to the Union Bank survey.
However, 100 percent of owners of personal-service businesses surveyed, including beauty salons, auto shops and dry cleaners, were positive about the shape of the economy, as were more than two-thirds of the business professionals who responded, including doctors, lawyers, architects and accountants.
“The variances that occur in each industry are also helpful in letting us know which sectors to keep an eye on in the coming months so that we can manage investments for future success,” D'Auria said.
The Competitive Edge survey found that the health care industry was among the most negative, based on fears that the Affordable Care Act and other government initiatives would lead to lower revenue.
Automotive and transportation-related businesses saw the largest jump in optimism.