Survey Says . . . 2008 Should Be Great

San Fernando Valley business people are upbeat about how well they will do in the new year. A majority of business people surveyed by the Business Journal and accounting firm Miller, Kaplan, Arase & Co. said they expect to hire employees, release new products or services and increase revenues. More than three-quarters of the respondents called the San Fernando Valley a good place to do business. The responses counter the forecasts of an economic downturn and possible recession in 2008. There was a note of cautiousness about ongoing problems in the lending and financial industries and the ongoing writers strike affecting the entertainment industry. “What the survey shows us is that the bad news is more vocal than the good news,” said George Nadel Rivin, a partner at Miller Kaplan. “Therefore we found it refreshing there are folks out there who are optimistic.” The survey was available to Miller Kaplan clients and Business Journal readers for a four-week period ending Dec. 17. The questions could be answered on a paper survey included in the Business Journal or online through the paper’s and Miller Kaplan’s homepage. The accounting firm sought a minimum number of 200 respondents with the total ending up at 248. The respondents came from a variety of industries and nearly all zip codes from the Valley were represented, making for a diverse pool. Rivin and colleague Andrew Rosen developed the questions with Business Journal Publisher Pegi Matsuda and Editor Jason Schaff. The four created a questionnaire that zeroed in on areas that would be on the minds of business people and that could be completed in one sitting, Rivin said. When it comes to hiring in the new year, 51 percent of respondents said they plan to add staff. Of those potential new hires, the most were in skilled labor, followed by unskilled labor, and mid-level management. Of those responding they would make layoffs, most planned to cut unskilled labor. A majority taking the survey anticipate higher revenues in 2008 compared with last year. Eighty-two respondents expect revenues to rise up to 10 percent, while 90 respondents expect revenues to increase 10 percent or more. That same optimism was reflected by respondents when asked about operating margins in 2008. One hundred three respondents said their operating margins would increase up to 10 percent and 49 said it would increase 10 percent or more when compared with 2007. Out of the 19 questions asked, that response surprised him the most, Rivin said. That so many business people expect increases in their operating margins indicates they are producing more efficiently, Rivin said. “I would have expected more 50/50 on ability to increase operating margins,” he added. The responses were just about even when dealing with making capital improvements 43 percent of respondents said they were not, with 42 percent saying they were. The latter number was seen as a good sign by Bruce Ackerman, president of the Economic Alliance of the San Fernando Valley. “Capital improvements tend to be large dollar expenditures and if businesses are spending that money that speaks loudly to solid growth,” Ackerman said. “In a growth plan that is the last thing they get around to.” The responses on hiring in 2008 track with the numbers from the annual forecast from the Alliance and the San Fernando Valley Economic Research Center at California State University, Northridge, Ackerman said. The overall survey results also agreed with the Alliance forecast of steady moderate growth in the Valley. “You look at results of the Valley and it shows solid modest growth pattern,” Ackerman said. “Compare that with the whole state and we are ahead of the package. That’s great; that speaks to the diversification and the type of industries.” Fifty-eight percent of respondents said they were planning on introducing new products and services this year. About 30 percent answered in the negative, with 11 percent undecided. The 58 percent figure did not come as a surprise to Valley Industry & Commerce Association President Brendan Huffman. “The Valley is so cutting edge in developing products and services that sophisticated consumers want,” Huffman said. “The world looks to this region for trend setters. There are so many manufacturers, so much high tech, so many opinion leaders living in the area, it goes without saying most of the world’s trends start in Southern California.” The survey asked respondents to select one of six responses to define which factors most negatively affected business operations in the Valley. The cost of insurance was number one, chosen by 36 percent of respondents, with gas prices following at 33.8 percent, and state and local taxes a close third at 33.3 percent.