The city’s small business owners feel less optimistic about 2019 than they have for the past few years, according to a study released by Long Beach State University.
“People are becoming a little bit more cautious than they have been … they don’t have as much confidence in the local economy as they have in the past, and many businesses are reducing their sales forecasts,” said study director and professor Scott Flexo, Ph.D., who works in the marketing department of LBSU’s College of Business Administration.
CSULB has released its expectations index annually since 2012, calling it the Long Beach Small Business Monitor, and making it a public resource for the community. It is based on professionally conducted phone survey results of 250 randomly selected owners of enterprises with up to 50 employees; with that sample size, the margin of error is about 6.3 percent.
“One in four business owners believe it will be worse,” the report states about the local Long Beach economy. That, Flexo said, begs the question no one can yet answer: Is a slump coming?
“There’s just a general sense that things aren’t going to be as good this year as in the past,” Flexo said. “There isn’t one reason people give — there’s just a whole host of things going on that makes them feel less confident. People aren’t as optimistic as they have been.”
Despite being more cautious and less optimistic about the local economy’s future, a majority of owners — roughly 54 percent — do anticipate an increase in their own sales this year, but that percentage of optimistic owners is lower than in previous years.
Hiring expectations also are trending lower, with 29 percent of small business owners in the city planning on hiring more employees this year, representing a 4 percent decrease since 2017.
Credit and financing for small businesses in the coming year are expected to remain unchanged. And, a slight increase is actually expected in the percentage of those planning to spend more on capital improvements, including new supplies and inventory this year, with 39 percent planning to do so.
Flexo emphasized that Long Beach’s small business optimism being on the decline is no isolated incident. The trend mirrors that of Gallup’s 2019 national survey of small businesses.
“This is happening all over the country, and it isn’t tied to any one particular thing that can be quantified,” the professor said. “It will become more clear as the year plays out a little bit, but there’s a concern that we are reaching the end of a growth period. People wonder if we can keep consuming at the rate we’ve been consuming.”
He also noted that the local survey was conducted during the recent government shutdown, which may have added to the participants’ uncertainty about the future. And, he said many small business owners have expressed concerns about rising interest rates.
“They are nervous, and they say, ‘I don’t know what’s going to happen, so I’m going to pull back a little and be a little less optimistic,’” Flexo said. “There’s anxiety that the good times are coming to an end.”
For more information, including the full report, visit www.csulb.edu/college-of-business/marketing/long-beach-small-business-monitor-lbsbm.