Despite Reno-area housing woes, small business confidence swells
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RENO, Nev. — For Nathan Strong, executive director at Nevada Small Business Development Center in Fallon, the concern he hears most from business owners is a lack of available — and affordable — housing.
In turn, he said, businesses experience a lack of available workforce.
“In Reno, there’s a housing and workforce shortage, and in the rural areas that’s amplified,” Strong said in an interview with the NNBW. “You got out to the rural areas, it’s not a shortage — we have none; we’re out; we’re at zero. I know if I had more houses, I’d have more workforce to choose from.”
With that, it should come as no surprise that affordable housing was one of the biggest concern areas for small businesses in Northern Nevada, according to Nevada State Bank’s fifth annual 2018 Small Business Survey.
The survey was conducted in January 2018 and included interviews with 400 Nevada business owners in companies with annual sales ranging from $250,000 to $10 million.
Terry Shirey, president and CEO of Nevada State Bank, broke down the survey as part of his keynote address at the Northern Nevada Business Weekly’s Breakfast & Business event Thursday, April 5, at the Atlantis Casino Resort Spa.
Shirey revealed that 41 percent of small businesses in the region said they were “very concerned” about the supply of affordable housing, and a mere 10 percent said they were not concerned.
After all, Northern Nevada’s median sales price of existing homes reached $345,000 by the end of 2017, an increase of 16 percent from 2016. For comparison, in Southern Nevada, the median sales price of existing homes was $238,000, according to the survey.
“It’s impacting (Reno’s) ability to continue to grow the economy,” Shirey said. “And when you layer on the employment challenges of attracting qualified candidates, which small business are telling us they’re struggling with, high housing prices aren’t helping.
“This is definitely something for us all to keep our eye on.”
Despite the housing concern, small businesses owners throughout the Silver State are brimming with confidence and optimism.
More than 87 percent of the companies surveyed believe Nevada’s economy is heading in the right direction, according to the survey. What’s more, Shirey pointed out that 53 percent of those surveyed reported higher revenues over the past year, and more than 70 percent said they expect the earnings to continue to grow in 2018.
“Overall it’s a positive attitude in all of the measurable things,” said Michael Norman, a financial services professional at New York Life in Reno. “It was turned all around from a very difficult downtime.”
In fact, Shirey said from the pre-recession peak (May 2007) until now, Nevada is up 39,000 jobs. One of the highest growth areas is manufacturing, as 4,200 such jobs were created in Reno alone last year.
The uptick stems from the Tesla Gigafactory 1, which is projected to employ 6,500 people in 2018, according to previous reports.
Growth and expansion
As the economy continues to boom, businesses are having an easier time obtaining bank financing, according to the survey. Specifically, it showed that more than a quarter of businesses said they anticipate applying for financing in the next 12 months for equipment (17.9 percent) or expansion (16.2 percent).
Strong feels that more businesses need to be looking into obtain financing, however.
“We need people in our banks asking for money in rural areas because that’s good for everybody,” he said. “If they’re optimistic and they have that confidence, if they can expand, or do one more little thing in their business to increase customers, that’s what we need.”
Shirey said Nevada State Bank is approving about 61 percent of its small business loan applications, up from 55 percent last year. Unlike in years past, he said loan requests are often based on growth and expansion.
“Whereas you go back five years, a lot of businesses frankly needed equity and were dealing with debt and struggling with cashflow,” he said. “What’s changing is the health of small businesses.
“They’re telling us that they’re revenues have increased, that they’re expecting them to continue, and we’re seeing that.”
The unanimous approvals Wednesday came despite state leaders promising to tighten up requirements for Nevada’s tax abatements and incentives for future companies.