Despite an Improving Economy, Citibank Survey Finds that Recession Lingers for Majority of California Small Businesses

SAN FRANCISCO--(EON: Enhanced Online News)--Though a growing number of economic indicators point to an improving economy, the latest Citibank small business survey indicates otherwise. An overwhelming majority (79 percent) of California small business owners say they believe current business conditions are only fair or poor, while 45 percent say their own business condition is worse off than it was a year ago. At the same time, however, a majority (55 percent) of small business owners in California say their business has performed better than they expected. Looking ahead, 44 percent say they expect their business will be better off in the next 12 months, expressing a tempered level of optimism.

“In an environment where executives say their small businesses have been 'forever changed' by the recession, younger executives express more optimism”

While small business owners have typically led the economy out of recessions, only 21 percent of California small businesses expect to increase their number of full-time employees in the next 12 months. This lack of hiring is being driven by uncertainty about the economy in general (80 percent), a belief that they have the right number of employees for their current business volume (79 percent), uncertainty about how their business will do over the next 12 months (81 percent) and diminished sales (74 percent).

When asked what would encourage them to hire additional employees, the majority of California small business owners said an increase in their business volume (88 percent) or an improved general business climate (83 percent). Sixty-two percent would be encouraged to hire if they receive a permanent reduction of their payroll tax rates or if their state, local, sales or property taxes were reduced (55 percent).

“California’s small business owners are realistic about the challenges in the current environment, yet they are optimistic about the future and resolute about their choice of a career,” said Rebecca Macieira-Kaufmann, President of Citibank California. “Small businesses are the backbone of the California economy, and though they have been hit hard by the recession, they are surviving and getting ready to grow when economic conditions improve.”

California’s Entrepreneurial Spirit Thrives Despite Recession

And despite the challenging environment, the survey showed that California small business owners remain firm believers in owning and running a business. Seventy-three percent of respondents say they would start their business again, even if they knew then what they know now about the challenges they would face, and 57 percent would recommend small business as a career to their children.

Among the survey’s other key findings in California:

64 percent say the recession has “forever changed” how they run their business
47 percent say “my business is surviving and things are somewhat better than I expected” vs. 37 percent who say “my business is struggling and worse than I expected.”
Respondents cite increase in sales (36 percent) and improving economy (14 percent) as the top factors needed to improve their business performance over the next 12 months.

National Results: Younger Small Business Owners are Especially Optimistic

In its national results, the survey also uncovered significant differences between age groups among small business owners in the United States, as respondents aged 18-44 were more optimistic on a range of questions than those aged 45 or older. For example, 53 percent of younger respondents say their business will be better off in 12 months, compared to 41 percent of those between ages of 45 or older. In addition:

55 percent of younger respondents say the recession has “forever changed” the way they run their business, compared to 69 percent aged 45 or older
33 percent of those aged 18-44 say business conditions are currently somewhat or much worse, compared to 46 percent aged 45 or older.
23 percent of respondents 45 or older say they would not start their business again knowing what they now know about the challenges they would face, while only 9 percent of those aged 18-44 say they wouldn’t start their business again.

"In an environment where executives say their small businesses have been 'forever changed' by the recession, younger executives express more optimism,” said Raj Seshadri, the head of Small Business Banking at Citibank. "Our survey indicates that younger entrepreneurs are more inclined to have a different attitude toward stimulating business growth and change."

About the Survey

This Citibank poll was conducted via telephone by Abt SRBI during the period March 10 - March 31, 2010 among a national random sample of 552 small businesses, with revenue over $100,000 and no more than 100 employees. The margin of error is approximately +/- 5 percentage points at the 95% confidence interval. Surveys are subject to other error sources as well, including sampling coverage error, recording error, and respondent error.

About Citibank

Citibank is a member of Citi^®, a leading global financial services company which has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.

Tags/Keywords:
Citi, Citibank, small business, entrepreneurs, start-up