Los Angeles entrepreneurs compete for talent as revenue growth fuels expansion

Los Angeles-area entrepreneurs are finishing 2018 on a high note, with most local small business owners anticipating year-over-year revenue growth and indicating plans to hire and expand in the year ahead, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report. That said, a historically tight job market is complicating expansion plans as Los Angeles entrepreneurs find themselves in greater competition to retain and hire talent.

The report, based on a semiannual survey of 1,000 small business owners across the country and the greater Los Angeles area, reveals that 86 percent of Los Angeles entrepreneurs are confident their year-end revenue will exceed that of 2017. In addition, over the next 12 months:

  • Seventy-one percent of Los Angeles business owners believe their revenue will increase (a record high in Los Angeles and 14 percentage points above the national average) • Seventy-nine percent plan to expand (vs. 80 percent in fall 2017)
  • Thirty-four percent plan to hire (vs. 28 percent in fall 2017)
  • Fifty-three percent are confident the Los Angeles economy will improve (vs. 47 percent in fall 2017)
  • Fifty-three percent express similar confidence in the national economy (vs. 48 percent in fall 2017)
  • Twenty-one percent intend to apply for a loan (vs. 16 percent in fall 2017, and a two-year high)

“Our study points to a robust small business sector here in Los Angeles, with several key indicators revealing local businesses expect to continue on that trajectory in the year ahead,” said Franco Terango, small business southwest division executive at Bank of America. “While revenue, expansion and hiring are all on the rise, one area that poses an increasing challenge to growth is the search for qualified talent in what is an increasingly competitive job market.”

Heightened competition for Los Angeles talent as small business hiring ramps up

As Los Angeles business owners make plans to hire in the year ahead, they acknowledge that identifying and retaining employees has become a significant challenge. In the last year, turnover has affected 28 percent of Los Angeles entrepreneurs. Among those who sought to hire new employees, 55 percent say they had difficulty finding qualified candidates (23 percentage points above the national average), in large part due to the tightening job market.

To adjust to these challenges, business owners who sought to hire in the last year have modified their hiring strategies by:

  • Shifting to a more flexible culture (27 percent)
  • More actively using social media (22 percent)
  • Offering higher salaries (18 percent)

When it comes to the top characteristics Los Angeles business owners look for in potential job candidates, they prioritize integrity (55 percent), passion for the work (49 percent), previous work experience (45 percent), ability to learn new skills (38 percent) and tech savviness (25 percent).

Concern over most economic issues fade; worry over corporate taxes declines significantly

In correlation with positive Los Angeles business forecasts, the survey found concern over many economic factors has declined. Health care costs remain the top concern in Los Angeles—although concern has dropped to 59 percent versus 61 percent in fall 2017. Concern over corporate taxes has also decreased since last year, with only 43 percent identifying this as a burdensome issue nearly a year after the enactment of U.S. tax reform, down from 52 percent in fall 2017.

Perhaps a result of recent changes to and uncertainty about trade policies, 42 percent of Los Angeles business owners identify U.S. trade policy as an economic concern. Fifty-one percent say the latest tariffs/U.S. trade policies have impacted their businesses, with 19 percent reporting a positive impact, 16 percent reporting a negative impact and 16 percent reporting both positive and negative effects.

Los Angeles business owners feel the holiday spirit; recommend entrepreneurship as a career

Los Angeles business owners are feeling the holiday spirit as the majority plan to offer at least one holiday perk to their employees. The top holiday perks planned this year are flexible hours or vacation time (48 percent), employee gifts (42 percent) and bonuses (41 percent). Finally, despite unique challenges in managing a small business, Los Angeles entrepreneurs love what they do. Ninety-one percent say the added stress of entrepreneurship has been worth it, and 85 percent would recommend that others follow in their footsteps.

For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2018 Bank of America Business Advantage Small Business Owner Report and for additional insights, download the Small Business Owner Report infographic.


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