Business Owners Feel Good About 2014
Each year the California Association of Business Brokers has an annual conference. The focus of the conference is to allow members to share best practices, understand new trends in the economy, what lenders are and are not doing, changes in law, tax and accounting and other related items.
This year the conference was in early April in Newport Beach and one of the keynote speakers was from Pepperdine University. Pepperdine University is located in Southern California and includes the Graziadio School of Business and Management. It is one of the few universities to study in depth the market of privately held businesses and how they operate and do things differently to the businesses or corporations that are publicly traded on the Dow, NASDAQ and other exchanges.
Dr. Craig Everett was the speaker and not only is he an assistant professor at Pepperdine, he is also the director of research for a project at Pepperdine which is called the Pepperdine Private Capital Markets Project. The focus of this project is tracking the true cost of private capital across different market types and the investment expectations of privately held business owners. That is, the shares of publicly traded companies are able to be bought and sold in milliseconds on the different exchanges but this is not the case for privately held companies; there is no market and as a result, public and private capital in these privately held businesses is done in an entirely different way.
Some of the findings that Dr. Everett gave during his presentation include the following:
- The confidence of business owners in 2014 is higher than 2013 as seen by the following table.
| 2013 | 2014 | |
| Probability of a recession in the next year | 36.2% | 29.2% |
| S&P 500 growth rate | 3.4% | 4.0% |
| US unemployment rate | 8.0% | 7.7% |
| Lacking confidence the US GDP rate will grow | 30% | 21% |
- Perception of what factors will influence US growth next year as seen by the following table.
| Impediments to US growth the next year | 2013 | 2014 |
| Limited access to capital | 22% | 18% |
| Government Regulations | 42% | 39% |
| Global political and/or economic environment | 29% | 30% |
| Domestic US economic and/or political environment | 9% | 13% |
- 81% of respondents were confident the US economy would experience flat to positive GDP growth. That is, only 19% saw the economy shrinking in 2014.
- This is an interesting statistic. Only 2% of employers with 16 or more employees expect to hire more. Employers with zero staff do not expect to hire any new employees. Employers with 1 to 15 employees plan to hire additional employees.
- In 2014, 58% of employers plan to increase the salary they pay their employees. In 2013 this statistic was 45%.
- In 2013, 61% of respondents agreed that instability in Washington, DC was affecting their ability to hire. In 2014, this figure was 57%.
- In 2013, 37% of business owners personally made more money. In 2014, this figure increased to 42%.
- Policies that business owners would support in 2014 were as follows:
- A balanced US Budget – 78%
- Comprehensive immigration reform – 60%
- Significant reform of the Affordable Healthcare Act – 58%
- Repeal of the Affordable Healthcare Act – 49%
- Continuation of QE by the Federal Reserve – 38%
