The 2010 survey, based on interviews conducted in January, is the
largest in the past decade, with 2,541
“We’ve been through the deepest
recession since the 1930s, so it’s not
surprising that small business owners
are in a holding pattern,” said Ex-
ecutive Vice President Joseph Benoit,
head of Union Bank’s Business Banking
group. “Most entrepreneurs believe
the worst is over, but they’re still
taking a very conservative position be-
cause of the slow pace of the recovery.
They’re not confident enough to shift
into a growth mode yet.”
The survey data show that nearly
one out of four business owners (24%)
had to lay off employees for financial
reasons in 2009. This is a five percent
increase from 2008 and the high-
est level of layoffs since the survey
began tracking staffing reductions in
2002. Business owners reporting lay-
offs hit a low of six percent in 2006,
but the number has increased each
year since then.
Nearly half of business owners
(48%) reported lower sales in 2009
compared to 2008, the largest percentage in the history of the survey. Fifty-five percent cut their operating costs
last year, and 39 percent reduced their
debt to protect their company from
turmoil in the financial system.
“Given all these difficulties, it’s encouraging to see that 95 percent of small
business owners do not anticipate layoffs in 2010,” said senior vice president
Christy Schmitt, head of Union Bank’s
Retail Small Business Banking.
Other Survey Highlights
◗ 21% of business owners expect to
increase capital expenditures in
2010. This number dropped from
73% in 2006 to 35 percent in 2007
and hit a nine-year low in 2009 at 17
◗ 19% of business owners were
denied a loan or access to business
credit in 2009, and 67 percent of
these businesses were unable to
find alternate financing.
◗ 37% reported no change in their
pricing for products or services
in 2009, while another 30% raised
some prices and lowered others.
◗ 41% said they had less flexibility in
negotiating costs and services with
vendors in 2009 than in 2008.
◗ 45% of small business owners offer health care coverage to their
employees, down slightly from last
year’s study. Nearly half of those
with health care coverage (46%)
said the cost of health care has not
affected their business.
◗ The top advantages of doing
business in California have remained the same since the survey
began asking this question in 2004.
They are: the state’s favorable
climate, opportunities for growth
and family ties.
◗ 52% offer paid vacation, a drop
of six percent from last year and
10 percent from 2008. Thirty-eight
percent offer flexible work arrangements.
◗ 43% are using recycled materials,
while 30% have taken no action to
make their business “greener.”
The top challenge identified in run-
ning a business in California — the
state’s economy — remained the same
as last year, and this result accurately
reflects much weaker economic data
for California than the rest of the
nation, according to Union Bank’s
Director of Economic Research, Senior
Vice President Kei Matsuda. For ex-
ample, California lost six percent of its
payroll employment in 2009 while the
nation lost only 4.3%.
About the Survey
Union Bank surveyed 2,541 small business owners throughout California
from January 11-29, 2010. The businesses, defined for the survey as $5 million
or less in annual sales, included a mix
of bank customers and noncustomers.