California is among the worst states in the country for small businesses, according to a new survey from the Kauffman Foundation and Thumbtack.com.
Even worse, the Central Valley ranked lowest among California regions. The Valley finished dead last in both support of small business and the cost of hiring new employees.
Though many business climate rankings exist, the new survey is the only source to base its data on surveying small business owners themselves.
“After a two-month survey of over 6,000 small business owners nationwide, it's clear that California is failing in the eyes of its small businesses,” said Sander Daniels, co-founder of Thumbtack.com. “And the Central Valley is compounding the problem with its unfriendly policies.”
The Kauffman Foundation surveyed 6,022 of the small businesses listed on Thumbtack.com, a site to hire local help. Those small businesses were queried in 15 areas, ranging from state support of small business owners to financial status and whether or not the owners would encourage someone to open a new business in the state.
California was one of four states to garner an “F” grade in the rankings, along with Vermont, Hawaii, and Rhode Island. Dragging California down was its tax code, ranked second least-friendly of all states, and onerous health and safety, labor, and licensing regulations.
Of the 40 cities singled out in the rankings, three of the four “F” graded municipalities were located in California: Sacramento, Los Angeles, and San Diego. Tucson, Ariz., was the only other “F”-ranked city.
The published survey includes two responses from Turlock zip codes, one from a 25-34 year old female health instructor and the other from a 55-64 year old male in home repair and realty. Both classified employment, labor and hiring regulations as “somewhat difficult” and tax code and tax-related regulations as between “somewhat unfriendly” and “very unfriendly.”
“I think all California is concerned about is collecting taxes and imposing fees,” said a Turlock real estate broker in response to the survey. “That is why most of the big businesses have moved out of California and the US in the past 3 years.”
The two respondents differed on their opinion of starting a business in the area – the man termed it “somewhat easy” and the woman “somewhat difficult” – and whether they would encourage someone else to open a business – the man would “neither encourage or deny” and the woman would “somewhat discourage.”
Though the survey indicates the Central Valley is unfriendly for small businesses, the situation may be better in Turlock, according to local business experts.
“Saying that the Central Valley is the worst for small business? That’s painting with a broad brush in my opinion,” said Al Seaton, the Alliance Small Business Development Center’s lead consultant in Turlock.
Seaton attributed the poor rankings to the “double whammy” of the declining economy and the difficulties and technicalities of California regulations. He admitted it’s an “uphill struggle” for new businesses, but noted there’s more help available in Turlock than most other regions of the Valley.
The SBDC consults with new businesses, helping them through the tangled web of regulations and the basic tenants of entrepreneurship. The Alliance Worknet offers programs which pay part of the cost of new employees, helping both out-of-work Turlockers and businesses looking to expand.
The City of Turlock offers new businesses opening in existing storefronts a $1,000 check, just as an incentive for coming to Turlock.
“I think the business climate in the Valley proper is the worst it has ever been since the Great Depression, but we have the advantage with the Alliance Worknet and the SBDC,” Seaton said. “We’re fighting the good battle.”
Many local small businesses have seen success in spite of the down economy. Lightly Used Books, which opened in the midst of the recession in July 2010, is now growing.
“It was hard getting started, but we’re alright,” said owner Valorie Brown. “We’re hanging in there; we’re building the business, slowly but surely.”
Lightly Used Books has doubled in shelf space since opening. The store has even expanded into the formerly vacant store next door.
The permitting process needed to get the business up and running wasn’t bad, Brown said, just a few hoops to jump through.
Lisa Wilson, co-owner of downtown Turlock stalwart Main Street Footers said Turlock has been great to her small business.
“What recession?” asked Wilson.
Despite being in business for 30 years, Wilson said Footers continues to attract new customers. Business has remained steady throughout the recession, she said, with lunch traffic remaining strong as ever.
“I don’t think things are really bad, I think things are really great,” she said.