Los Angeles small business owners look to grow

Local small business owners see big opportunity in the year ahead, despite small declines in revenue expectations and economic sentiment since last fall, according to the spring 2019 Bank of America Business Advantage Small Business Owner Report released today. The softening in mood over the economy comes as Los Angeles-area entrepreneurs report mixed views on the impact of last year’s landmark tax reform and trade tariffs.

The report, based on a semiannual survey of over 1,500 small business owners across the country and the greater Los Angeles area, reveals that:

Los Angeles entrepreneurs maintain a strong outlook for their business over the next 12 months:

  • Eighty-two percent plan to expand their business (vs. 79 percent in fall 2018).
  • Sixty-five percent believe their revenue will increase (vs. 71 percent in fall 2018).
  • Thirty-two percent plan to hire (8 percentage points above the national average of 24 percent this spring).
  • Nineteen percent plan to apply for a loan.

While their economic outlook for the next 12 months has weakened slightly:

  • Forty-six percent believe the local economy will improve (down from 53 percent in fall 2018).
  • Forty-three percent believe the national economy will improve (down from 53 percent in fall 2018).
  • Top economic concerns include health care costs (61 percent), consumer spending (58 percent), the political environment (57 percent) and interest rates (54 percent).

“Los Angeles entrepreneurs are continuing to invest in their businesses, despite growing reservations about the economy and a small decline in revenue expectations,” said Franco Terango, small business southwest division executive at Bank of America. “Compared to the national average and historical data, the overall outlook is certainly positive, and the opportunity for Los Angeles business owners remains strong.”

Los Angeles business owners split on effects of recent policy changes, contemplate impact of climate change

Fifty-seven percent of Los Angeles entrepreneurs expressed concern about the current political environment, though they are divided over how major policy issues are directly impacting them. More than half of Los Angeles business owners say the new tax code has had an impact on their business — with 24 percent reporting that impact as positive. This is down from the 32 percent who anticipated a positive impact one year ago.

Regarding U.S. trade policy, 45 percent say they have been impacted by tariffs, with 18 percent reporting the impact as mixed, 16 percent reporting it as negative and 11 percent reporting it as positive. Additionally, 39 percent of Los Angeles entrepreneurs say they’re concerned about climate change affecting their business.

Most Los Angeles entrepreneurs take steps to protect their business

Unexpected or major economic events can transform a business in the blink of an eye. While most Los Angeles entrepreneurs are taking steps to protect their business from potential threats such as natural disasters, an economic downturn or a cyber breach, a majority do not have a plan to address reputational crises or challenges.

  • Sixty-four percent have a business continuity plan in case of an earthquake, fire or other disaster.
  • Seventy-five percent have taken steps to protect their business in case of an economic downturn.
  • Eighty percent have taken at least one step to protect customer data from a cybersecurity breach.
  • Only 28 percent have a plan to manage reputational issues and threats.

The power of posts — are online reviews more of a trust broker or breaker?

Customer feedback holds tremendous sway in the digital era, with online reviews serving as a powerful channel for sharing both compliments and criticisms. While 63 percent of Los Angeles business owners have received a negative online review of their business, 59 percent believe positive reviews matter the most, compared to 41 percent who say negative reviews have a greater impact.

Furthermore, 76 percent say reviews are important to the success of their business, with 79 percent reporting that positive reviews have helped generate business opportunities. Recognizing that negative reviews do have an impact, 76 percent of Los Angeles business owners who have received one say they respond as soon as possible to limit the reputational damage.

For a complete, in-depth look at the insights of the nation’s small business owners, read the spring 2019 Bank of America Business Advantage Small Business Owner Report. For additional insights, download the Small Business Owner Report infographic.

5/10/19


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