One-Eighth of Small Firms Are Reported in California

Entrepreneurs looking for opportunities in California might consider getting into the apparel industry, starting a biotechnology firm or opening a temporary help agency, according to an economic report released Wednesday by Wells Fargo Bank.

These areas are particularly attractive for future growth, but small businesses throughout California are thriving, according to Douglas Freeman, executive vice president of the business banking group at Wells Fargo.

In fact, one out of every eight small businesses in the country is located in California, according to the Wells Fargo report titled, “Small Business in California, a State of Success.”

“Small business is a force to be reckoned with in California,” Freeman said.

Since 1982, income from California-based small businesses has grown an average of 13% a year, compared to the national average of 11%. The small-business growth rate also beats the 8% growth rate for total personal income in the state, the report said.

In the past 10 years, businesses with fewer than 50 employees have created one out of every three jobs in the state, according to the report.

Fifty-six percent of the state’s small businesses are located in Southern California. The San Francisco Bay Area accounts for about one-fourth of the state’s small businesses. The Central and Sacramento valleys, with their lower overhead costs and affordable housing prices are also attracting new small businesses.

Wells Fargo’s economists found that between 1982 and 1988, small California garment makers created almost 11,000 new jobs, despite severe foreign competition. California’s growing pool of immigrant labor has fueled the growth of small businesses in the apparel industry.

Despite the financial risks involved in starting new biotech firms, the number of California-based biotech firms doubled between 1984 and 1989, the report said.

Corporate cost-cutting has provided thousands of new jobs for temporary workers, especially among technical and professional workers. In 1988, an average of 160,000 temporary workers reported to work for California companies every week, according to the Wells Fargo report.

SMALL BUSINESS AND JOBS

Chart shows the number of new small-business jobs created in selected industries in California between 1982 and 1988, and small business’ share of total job creation by industry.

Increase in Small business’ small-business share of Industry jobs total Construction 150,171 55.1 % Manufacturing 54,897 25.1 % Transportation and public 32,361 58.3 % utilities Wholesale trade 51,533 29.3 % Retail trade 103,545 22.4 % Finance, insurance and 64,257 33.9 % real estate Services 290,048 31.4 %

Source: California Employment Development Department