Business & Real Estate

Sacramento County small-business owners nervous about U.S. economy, survey says

Sacramento County small-business owners are nervous about the national economy but feel more optimistic about things closer to home.

Those are among the findings of Union Bank’s annual Small Business Economic Survey. Union Bank’s principal corporate office is in New York; its main banking office is in San Francisco.

According to the bank’s 2016 survey, 63 percent of small business owners in the Sacramento area believe the national economy is headed in the wrong direction. However, more than half of survey respondents believe the state and local economies are on the right track.

Jim Relles, owner of Relles Florist at 2400 J St. in midtown Sacramento, said he believes he knows why area business operators are nervous about the U.S. economy.

“I’m kind of cautious about it myself,” he said. “In my experience, when you have a (presidential) election year, the economy is just flat. It just seems like there’s so much distraction and uncertainty.”

But Relles said he’s cautiously optimistic about California’s economy and the local economy.

“Statewide, I’m hoping that whatever legislation there is will not affect businesses negatively,” he said. “… And I think you can say the same thing about the local economy.

“I’m hoping that the drought situation doesn’t become worse. Agriculture does bring a lot of money into the Sacramento area.”

Relles added that he’s optimistic about his own business more than two months into 2016. That dovetails with Union Bank’s countywide survey, which said 88 percent of area entrepreneurs believed their small businesses are headed in the right direction.

Surveyed business owners were split about the general climate for small businesses in 2016: 37 percent said it has worsened, 37 percent said it has improved and 26 percent said it has stayed the same.

Fifty-eight percent of Sacramento-area small-business owners reported that they are prepared for interest rate changes.

“The feelings of uncertainty about the national economy reflected in the survey results are somewhat consistent with what we’re seeing among small-business owners who are encouraged about the future of their businesses and cautiously expanding and increasing staffing,” said Todd Hollander, Union Bank’s head of business banking. “Our clients are working smarter to sustain their businesses and many continue to seek capital, but they are closely monitoring interest rates and are concerned about interest rate changes and other government implications during this election year.”

Skepticism about the national economy was reflected to some degree in the Union Bank survey’s results on planned capital expenditures.

Sixty-three percent of surveyed Sacramento-area small-business owners said they will keep capital expenditures the same as in the previous year, and 21 percent said they would decrease spending. Only 16 percent said they intend to increase spending.

Area business owners named issues related to the federal Affordable Care Act as the chief concern for their operations, with a majority saying that health care law changes had negatively affected their bottom lines.

In demographics questioning, 54 percent of survey respondents said they were “not at all concerned” about the wave of baby boomers reaching retirement age and the impact of that on their staffing levels.

“These results showing little concern surrounding generational staffing are not completely aligned with what our clients are telling us,” Hollander said. “Many clients are focused on attracting, training and maintaining talented millennials while maximizing experienced, proven employees who have decades of experience to help streamline staff transitions of retiring workers.

“The skills gap also remains a growing issue in a variety of industries.”

Mark Glover: 916-321-1184, @markhglover