Survey: Prior to pandemic, Nevada’s small businesses were bullish on 2020
RENO, Nev. — It may feel like ages ago, but back in January, before the global coronavirus crisis hit the U.S. coasts and spread into Nevada, small business owners across the Silver State were bullish on this year’s local and national economic outlook.
That’s according to Nevada State Bank’s seventh annual small business survey, which was conducted by Las Vegas research firm Applied Analysis in January.
For the survey, NSB canvassed more than 400 small businesses in Nevada with annual sales ranging from $250,000 to $10 million.
“It’s a useful tool for them just to take the temperature of where their business is,” Rick Thomas, executive VP/Northern Nevada executive of Nevada State Bank, said of the survey. “And try to incorporate it into their future business decisions, whether it may be an expansion or adding more employees.
“Obviously, the mandatory business closures due to COVID-19 are causing some hardships,” he continued. “I think our economy still shows a lot of promise — I think once we get through this, that will present itself again.”
Back in January, on the heels of a robust 2019, the majority of the state’s small business owners (76%) felt the national economy was headed in the right direction, according to the survey. What’s more, about 82% believed Nevada’s economy is following suit.
After all, in the past 12 months, a shade over half (50.5%) of the 400 respondents increased their revenues, and nearly half (48.3%) increased their profitability.
Zooming in on Northern Nevada, Thomas said 51% of small businesses in Washoe and Carson City counties saw an increase in revenues while 37% saw no change in revenue.
In addition, he said, more than two-thirds (69.6%) of Washoe-Carson small companies felt the business environment had gotten better over the past 12 months.
“I think the diversification and some of the growth in tech and manufacturing, gaming win had returned to good levels, and all that is just showing strength across the overall Northern Nevada economy,” Thomas said.
This doesn’t mean small businesses statewide — again, prior to the COVID-19 pandemic — are without their share of challenges and concerns. Chief among them, for the fourth year in a row, is healthcare costs, with 39.3% of respondents reporting they are very concerned with the cost of healthcare.
Ranking as the second biggest concern (35.3%) was hiring and retaining employees. Thomas noted that challenge jumped 10% from last year and surfaced as a top-three concern for the first time — a fact that did not surprise him.
“It’s just another indicator of economy growth,” Thomas said. “It’s one problem, but it’s a byproduct of something good. It’s good to have the growth and the diversification that we have, it’s just something we have to try to manage.”
In the same vein, the survey showed recruiting quality employees as a challenge, with more than 77% of small business owners saying it was somewhat or very difficult for them to recruit quality candidates — a 7.7% increase from last year.
Playing a role, Thomas said, is the lack of available jobs in Nevada, pointing to Nevada’s historically low unemployment rate. At the time of the survey (again, conducted prior to the COVID-19 crisis), it was a mere 3.3%, the state’s lowest jobless rate in 20 years.
“While the low unemployment is a sign of a strong economy,” Thomas said, “the lack of a qualified, available employee-base can increase costs, it can affect profit margins and it hampers companies’ ability to expand.”
Helping matters, he said, is the fact the state’s universities and colleges are generating more and more programs that “hit local employment-base needs” in industries like manufacturing and technology.
The NSB survey also showed that access to financing is a shrinking issue for Nevada small businesses. Specifically, less than half (48.8%) found it somewhat-to-very difficult to get financing from a bank, a 15.1% drop from 2019.
“Businesses have strengthened their balance sheets over the last few years,” Thomas explained. “They have a history of generating profitable positive cash-flow, coupled with the stable economy that we have, which in essence results in less risk.”
Looking deep into 2020, more than 47% of respondents expect the 2020 presidential election to have a positive impact on their business.
Of those surveyed, about 55% think the Republican party will win the presidency in November, 25% are “not sure,” and roughly 11% expect a Democrat to win.
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.