Nearly one in four small business owners in California don’t expect to be in business there in three years. The dismal findings of the Small Business California study echo recent research published by the National Federation of Independent Business (NFIB), Pepperdine University and Dun and Bradstreet Credibility Corp. These other studies also point to widespread pessimism among small business owners about future prospects for their companies and the overall economy.
Even though many economic statistics point to improvements and the stock market indices are also sharply higher, the reality for main street business is far different; the recovery is too little, too late.
California, which has for decades been considered an elite global center for entrepreneurship, is seeing that reputation tarnished with significant regulatory burdens and tax increases frustrating many business owners. Many of the respondents who indicate they plan to stop doing business in the state are doing so because the cost to run a business there is very high.
In my view, it’s important to recognize that too much pessimism could actually be a positive signal. It could mean that we truly have hit bottom and the opportunity for expansion is around the corner. This is usually the case in the investment world, where popular sentiment is a contra indicator; this means that when most people are pessimistic, things are about to get better. The reverse also holds: when most people are optimistic, it means that conditions are about to get far worse. If in fact this pessimism is actually a sign that conditions will improve . . . are you ready?
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