Smaller Southland Firms Expect Higher Profits : Survey: 75% with annual revenue of up to $150 million think they’ll do better in the next year.

Profits at small and mid-sized businesses in Southern California are rebounding, a large accounting firm said Tuesday, as the regional economy continues to slowly improve and banks become more willing to loan entrepreneurs money.

The survey by Arthur Andersen & Co. found that three-fourths of Southern California’s smaller companies expect profits to rise over the next 12 months, while only 11% say their profits will fall--a more optimistic outlook than was recorded nationwide.

Those rebounding profits could soon translate into more jobs. Executives at nearly half the 369 local companies responding to the survey said they plan to hire more workers this year, compared to 29% of the 747 firms that were polled nationwide.

“Businesses in Southern California are much more confident about their future today than they were a year ago, and for good reason,” said Craig Isom, an Arthur Andersen partner who worked on the survey. “The companies that have survived the recession we’ve had over the past three years have emerged lean and mean, and they’re making money.”

The accounting firm defines small and mid-sized businesses as those that generate $1 million to $150 million in annual revenue. Arthur Andersen polled firms in the state’s seven southernmost counties.

*

The survey, which was conducted in May, found that 72% of the small and mid-sized businesses in the region recorded net profits in their latest fiscal or calendar years. That was up from 62% the year before.

About 80% of the companies polled said they plan to stay in California, the same percentage as a year ago. The 20% that said they were “considering or planning a move” blamed high local and state taxes, business regulations or the state’s often-maligned workers’ compensation system.

Despite the survey’s generally bullish results, Isom noted that about half the companies said they’re still worried about the region’s “recessionary environment” and competition from other U.S. companies. Only 12% had concerns about competition from overseas.

In the separate survey of 747 companies nationwide, Arthur Andersen found that 61% of the firms expect higher profits over the next 12 months but only 29% expect to hire more workers.