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 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:
“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.”
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:
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).
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 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.
GfK Social and Strategic Research conducted the Bank of America Small Business Owner Report Survey for fall 2018 online between August 30 and September 13, 2018, using a pre-recruited online sample of small business owners. GfK contacted a national sample of 1,067 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between two and 99 employees. In addition, a total of approximately 300 small business owners were also surveyed in each of 10 target markets: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco, and Washington, D.C. The final results were weighted to national benchmark standards for size, revenue and region.
Prior to 2016, waves of the Small Business Owner Report Survey were conducted by telephone and while best efforts were made to replicate processes, differences in sample, weighting and method suggests caution when making direct statistical comparisons of the results from pre-2016 and post-2016.
Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 4,400 retail financial centers, approximately 16,100 ATMs, and award-winning digital banking with more than 36 million active users, including nearly 26 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
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Reporters may contact:
Colleen Haggerty, Bank of America