Pepperdine University Graziadio School Study Shows Business Confidence Has Dropped

LOS ANGELES (Press Release – Oct 24, 2011) – Results released today from the first-time State of Small Business Report from the Pepperdine Private Capital Markets Project (PPCMP) shows business owner confidence has dropped 34% from Spring 2011 to Fall 2011. Looking ahead business owners have similar pessimism about the overall economy with just 29% expecting an improvement in business conditions over the next twelve months versus 25% who expect a continued deterioration.

Download Pepperdine’s State of Small Business Report at

While business owners have a negative outlook on general business conditions, small business owners report they will hire in the coming months. Nearly half (44%) of the 10,637 privately-held businesses that responded to the survey report they plan to hire additional staff in the next six months. For those looking to hire, 47.8% said sales and marketing skills are in the greatest demand, 41.6% prioritized skilled labor while 38.8% are looking for employees with service/customer service skills.

Small businesses said the top reasons preventing them from hiring new employees, 49% of respondents cited economic uncertainty, followed by 30% who said consumer demand, 23% identified government regulations and taxes and 22% listed access to capital. In addition, 34% of privately-held businesses indicated that providing increased access to capital and 24% said tax incentives are the surest path to job creation.

“A continued political stalemate and the potential for a European debt fall-out are likely driving business pessimism,” said Dr. John Paglia, lead researcher of the Pepperdine Private Capital Markets Project and associate professor of finance at Pepperdine University’s Graziadio School of Business and Management. “Even with profound uncertainty small businesses are looking to hire. Policy makers should seize businesses’ desire to expand by increasing availability to all sources of capital, especially bank loans and providing further tax incentives for small businesses — both of which will improve our overall economy.”

Other key findings in the State of Small Business Report include:

— When asked about the need to train new hires, 82% of respondents indicate that they will need to provide training to new employees.

— Privately-held businesses think there are opportunities for growth in the next twelve months with 39% of respondents saying that opportunities will increase slightly and 20% saying that opportunities will increase significantly.

— Of those respondents that tried to raise capital in the previous twelve months, 35% applied for bank loans and only 50% of them were successful. Whereas, 16% of respondents looked to friends and family for funding and 79% of them were successful.

In November, Pepperdine Private Capital Markets Project will release its seminal Capital Markets report and a first-time California Small Business supplement report. The Capital Markets report will provide the latest access to capital outlook across 11 market segments including angel investing, venture capital, private equity, mezzanine lending, banks, factoring, asset-based lending, investment banking, business appraising, limited partnership, and brokers. Dr. Paglia will present key middle market findings at the Southern California Capital Expo ( ), hosted by the Association for Corporate Growth Orange County Chapter (ACG-OC), on November 10.

The California Small Business supplement report will compare access to capital between privately-held businesses in Northern California and Los Angeles, Orange County, San Diego and Ventura Counties.

With over 99% of companies being privately-held, our economy is dependent upon the success of these businesses. The State of Small Business Report from the Pepperdine Private Capital Markets Project is a critical step along the path of understanding and increasing the value of private companies and our economy. Professionals who work in the lending or investment arenas either for an institution or a specific fund are excellent bellwethers of what is ahead for other businesses and consumers. Through two survey cycles and published summary reports per year, lenders, investors and the businesses that depend on them will be able to make optimal investment and financing decisions, and better determine where the opportunities to create lasting economic value may be realized.

Find Pepperdine Private Capital Market Project releases at:

About the Graziadio School of Business and Management

Founded on the core values of integrity, stewardship, courage, and compassion, Pepperdine University’s Graziadio (GRAT-ZEE-ah-DEE-oh) School of Business and Management has been developing values-centered leaders and advancing responsible business practice since 1969. Student-focused, experience-driven, and globally-oriented, the Graziadio School offers fully accredited MBA, Masters of Science, and bachelor’s completion business programs. More information can be found at .

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