Small-Business Owners Hedge Bets on ’87

Small-business owners in Los Angeles County are upbeat about their companies’ prospects for next year and “mildly optimistic” about the local economy, but they are cautious about expansion and hiring, according to a new survey.

“They’re definitely hedging their bets,” said Jack Kyser, an economist with the Los Angeles Area Chamber of Commerce, which released the study at a luncheon Friday honoring small-business people as part of National Small Business Week.

Bank of America Senior Economist Duane A. Paul told the crowd that the national, state and local economies will continue to pick up during the rest of the year, compared to 1985--which “was just not a really pizazzy type of year.”

Paul predicted that the nation’s gross national product, the measure of all goods and services produced, would rise to 3.2% from 2.2% in 1985 while inflation would slip to about 2% from 3.5% last year. “With a small degree of luck, we will see the growth continue into 1987 and maybe into 1988,” he said.

In California, “1986 is shaping up to be a very good year” with 350,000 to 400,000 jobs being created, retail sales accelerating and housing enjoying its best year since 1977, Paul said. Southern California will see more than 250,000 new jobs, a 10% gain in retail sales, a 9% jump in personal income and “modest” inflation of less than 4%, compared to 4.8% in 1985.

The Los Angeles chamber’s telephone survey of 300 businesses with fewer than 50 employees uncovered “a very definite note of caution,” Kyser said in an interview.

Slightly more than half of those surveyed said that their capital investment and hiring plans would remain about the same in the next year. A total of 30% said they will hike their investment, and 37% said they will hire more people.

While 40% said they thought the local economy would improve in the next year and 38% said it would be unchanged, a hefty 68% thought their own gross sales would pick up.

“They may be planning cautiously, but in their heart of hearts they think they’re going to do OK,” Kyser said. Los Angeles County had 167,030 small businesses in 1985, up 2.4% from the year before, he said.

At the luncheon, the U.S. Small Business Administration named Sharon L. Campbell, president of Wordtec Office Systems Institute, a Los Angeles word-processing training firm, as the area’s outstanding small-business person of the year.

The state award went to Elliot Hoffman, president of Just Desserts, a San Francisco bakery and restaurant.