Citibank Survey Finds Majority of California Small Business Owners Taking Action to Grow in 2011

In a sign that small businesses are finally emerging from the recession and looking to grow, an increasing number of California business owners are adopting social media as a way to better market their business and reach more customers, according to the latest Citibank small business survey. The increased use of social media represents one of several findings in Citibank’s survey that shows small businesses in California are taking concrete action to grow in 2011.

According to the survey, use of social media increased significantly over the last year, with 34 percent of California small business owners saying they use social networking sites such as Facebook, Twitter or LinkedIn to market their business, compared to 24 percent a year ago.

When asked what steps they will take to attract more business in 2011, 67 percent of California small business owners say they will increase marketing and 56 percent say they will offer new products and services. Additionally, nearly half of California small businesses plan to expand this year to reach a larger geographic area.

“As the largest creator of jobs in California, small businesses are crucial to boosting employment and driving economic recovery in the state,” said Rebecca Macieira-Kaufmann, President of Citibank California. “We are excited about the results of this survey, which show that California small businesses are optimistic about the future and taking action today so they can grow as the economy improves.”

Business Conditions, Outlook Stabilizing

Though a majority (70 percent) continues to rate current business conditions as fair or poor, Citibank’s survey shows that California small business owners clearly believe the worst is over, with 58 percent describing 2011 conditions as “steady as a rock.” Seventy-three percent say their business is better or about the same as a year ago, compared to 27 percent who say it is worse. Looking at the rest of 2011, 90 percent expect the year to be better or about the same as 2010, with 10 percent expecting it will be worse.

Among the surveys other key findings:

  • 78 percent say they would start their business again even if they knew then what they know now about the challenges they would face;
  • 72 percent of respondents are likely or very likely to use a website to expand their business in 2011;
  • 54 percent say they will work longer hours themselves to grow their business;
  • 52 percent say the biggest benefit of owning a business is being your own boss.

Hiring Plans

Hiring among California small businesses remains tepid. The majority of California business owners (77 percent) say they will keep the same number of employees over the next 12 months, while 17 percent plan to increase their workforce and 7 percent plan to reduce jobs.

When asked about wages, the majority of respondents (57 percent) say the compensation they pay their employees has remained the same in the past year, compared to 25 percent who have increased wages and 18 percent who cut pay. Forty-nine percent say they provide healthcare to their workforce, compared to 51 percent who say they do not.

Taxes, Energy Costs Pose Biggest Challenges

Of course, small businesses in California face many unknowns and challenges. Eighty percent of respondents say they are concerned about another economic downturn, while 73 percent say they are prepared should one occur.

When asked what would have the most negative impact on their business this year, small business owners say the increased cost of gas and energy (27 percent), the rising costs of raw materials (19 percent), and inflation (18 percent). Respondents cite reducing taxes (28 percent) and making credit more available (28 percent) as the most important issues to address if advising policy makers.

About the Survey

This Citibank poll was conducted via telephone by Abt SRBI from April 8 to April 21, 2011, among a national random sample of 1,004 small businesses in the United States, with revenue over $100,000 and no more than 100 employees. The design includes 200 interviews in California and 200 interviews in Chicago. The total margin of error is approximately +/- 3.1% percentage points at 95% confidence. The margin of error is higher for subgroups. Surveys are subject to other error sources as well, including sampling coverage error, recording error, and respondent error.

About Citibank

Citibank is a member of Citi®, the leading global financial services company, which has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com.

© 2011 Citigroup Inc. Citibank, N.A., Member FDIC. Citi and Citibank and Arc Design are registered service marks of Citigroup Inc.

Contacts:

Citibank
Robert Julavits, 415-658-4310
Robert.w.Julavits@citi.com
or
MSL Group
Stephen Gilmore, 212-468-4056
Stephen.Gilmore@mslgroup.com

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