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Guest Opinion | Hard Road Ahead for the Small Business Owner in Pasadena

Published on Thursday, May 26, 2016 | 5:14 pm
 
Christina L. Suter

A slow moving national economy mixed with increased city mandates adds stress to many Pasadena business owners. The growth in GDP in the U.S. of 3.5% in 2015 is not fueling a strong growth in locally-based business. This is after eight years of GDP being below 4.1% annual growth in U.S. dollars according to the U.S. Bureau of Economic Analysis. The average growth rate in the last eight years has been 2.8% as compared to the previous eight years of 2000-2007 an average growth rate of 5.2%. This has created a marked difference on the streets of many cities including Pasadena.

In Pasadena Now, Paul Little from the Pasadena Chamber of Commerce said that “small business members are not so optimistic. They are seeing sales trends that are staying flat or even shrinking”.

He continues on to suggest “I expect to see an increase in local unemployment as small businesses adjust to their new financial realities. We will also likely see some increases in prices among our locally owned retailers and restaurants that will, in turn, slow or stall sales growth.”

Further stress on small businesses is increased in city mandates such as the minimum wage increase which is required to be $15 an hour by 2020. This is further complicated by the corresponding increase in works compensation and taxes businesses will need to contribute based on the minimum wage increase. Further stress as stated by Little is “the city banning polystyrene packaging along with anticipated increases in costs of utilities and tax rates are putting more pressure on their bottom line”.

Despite Little’s concern about how we are feeling the effects of a sluggish economy, The Los Angeles County Business Federation (BizFed) survey reveals that 64% of business owners expect business conditions to improve either slightly or significantly compared to 2015, which is down 2% from last year.

In marked contrast, City Manager Steve Mermell in the City Budget, writes “Pasadena’s local economy continues to perform well. The local unemployment rate stood at 4.9% through March, better than Los Angeles County as a whole which was at 5.5%.” He also points out “building activities are up with numerous development projects underway or moving through the entitlement process.”

“Since 2009, commercial development has been robust, especially in the hospitality sector. Currently, there are five new hotel projects that are in various stages of development.” As well as “the City recently approved a nearly one million square foot commercial project that consists of 475 housing units and 620,000 square feet of office and rental space on the Parsons Engineering headquarters site.”

The anticipated effect of a growing commercial sector in Pasadena is very helpful to Pasadena as a community in the short and long term front. The commercial development such as hotels and housing will bring more jobs to the Pasadena area as well as more external dollars from the tourism it supports. And housing developments will bring more residents to Pasadena which will spend their money at existing local stores and restaurants.

This might be true but does not promise an immediate return for the Pasadena businesses for it takes time for development to happen and create the corresponding economic growth. The economy in Pasadena is still not rolling forward aggressively at this time and does not seem to have a strong US economy to support it. The effects of slow economic growth mixed with increased city and state mandates such as higher minimum wages by 2020 will be having its effect on the streets making business growth slow and downright hard in some sectors. There is some growth occurring in Pasadena, as Mermell points to, that will help to counter this minimal growth but it will still be a hard road for the small business owner in Pasadena.

 

As the founder and lead consultant of Ground Level Consulting in Pasadena, Christina L. Suter brings two decades of real-world experience as a serial small business owner and real estate investor. Suter developed her extensive financial and operational skills firsthand as she faced and overcame the challenges and demands of small business ownership while developing an extensive real estate portfolio. Her Ground Level Consulting is a consulting practice that works the way an entrepreneur works, dealing with the pressing problems of a business on the ground level and in real time.  For more, click here.

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