A LOS ANGELES TIMES - FINANCIAL TIMES SPECIAL REPORT : The Next California--The State’s Economy in the Year 2000 : The Next California / SMALL BUSINESS : Smaller is Better
California’s economy is undergoing a transition in which smaller, more aggressive start-ups are replacing larger, less efficient corporations as linchpins of local wealth and job creation. Small businesses, usually employing 100 people or fewer, make up about half of Los Angeles County’s current work force and are expected to play an increasingly important role in its economy. Economists project that the state will add about 42,000 small businesses to its economic base by the 21st Century.
Small Businesses
Total establishments:
1995: 775,190
2000*: 818,200
*
0-49 employees:
1995: 738,900
2000*: 780,900
*
1,000+ employees:
1995: 540
2000*: 595
* estimate
Networking Niche
As large corporations downsize, smaller firms are moving in to provide support services. Among the nation’s largest metropolitan areas, Los Angeles ranks first in the percentage of jobs tied to companies with fewer than 100 employees. A look at some of the fastest growing fields for small businesses in California:
* Biomedical firms generate quality jobs and wages and currently bring in three times as much revenue in California as firms in New York. The industry is poised for continued growth, and California has more biomedical companies than any other state.
* Minority- and women-owned businesses are expected to continue their unprecedented gains made in the state in the last 20 years. Latino-owned firms have seen a 700% increase in that period, and the Los Angeles-Long Beach and Santa Ana-Anaheim areas have ranked first and third nationally in the number of women-owned businesses.
* The motion picture industry is most representative of the shift to networks of small-scale production--the vast majority of feature films and television programs are developed and produced by independent production companies, many employing fewer than 10 people.
* California is the leading state for tourism, with Los Angeles the largest tourist destination in the state. Tourism is expected to grow almost 15% by 2000 and will be at least a $65-billion industry for the state in the 21st Century. This is good news for California’s small businesses: 74% of all eating and drinking establishments, 83% of all amusement- and recreation-related companies and 94% of hotels and motels here have fewer than 20 employees.
Sources: “The Next Act: Southern California’s New Economy,” Center for the New West; 1988-92 County Business Patterns; Jack Kyser, Employment Development Corp.; New Vision Business Council of Southern California; Times reports; U.S. Census Bureau
