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Small Business Bankruptcies Way Up in Golden State

Posted by B. Daniel Blatt at 2:54 pm - December 23, 2009.
Filed under: California politics, Entrepreneurs

Just up the street from me, a new business opened earlier this year in what had once been a furniture shop.  As I drove past it last week, the store was empty, the walls painted white, a “For Lease” sign perched in the doorway.  What struck me about this new business is that it was one of the few new enterprises I had seen in the Hollywood/West Hollywood neighborhood in the first year of the Obama/Reid/Pelosi era.  It didn’t make it to Christmas (or Chanuka for that matter).

Drive down the major commercial thoroughfares in this area, Santa Monica Blvd., Melrose, Beverly or 3rd and you’ll see a whole host of shuttered storefronts, with signs like “This Space Available” abounding.  Travel up the 5 to Sacramento and I would expect you’ll see a different sign.  While my friends in some professions report taking pay cuts so their employers don’t have to lay anyone off, state employees don’t appear to be suffering.  And many in the private sector in the Golden State have not been as fortunate as my friends with smaller salaries.

And the outlook doesn’t look good for California.  Small businesses, as even the President has said, create the most net new jobs.  But, as we learn via Jim Hoft, small business bankruptcies in the Golden State are far outpacing the national average:

“While bankruptcies are up, overall, small-business closures are up even more,” Headd [Brian Headd, an economist at the Small Business Administration's office of advocacy] said.

California has been particularly hard hit. The latest data show small-business bankruptcies up 81% in the state for the 12 months ended Sept. 30, compared with the previous year. Filings nationwide were up 44%, according to the credit analysis firm Equifax Inc.

The article focuses on the reluctance of banks to loan to small businesses.  Typical of the LA Times to ignore the burden of federal and state regulation which impact small enterprises the most.  Banks might lend more if the government didn’t attach so many strings to their lending of fear the legislation Barney Frank is pushing to regulate the financial sector even further.

With California legislators electing a union acolyte as their new Speaker of the House, the odds for reforms beneficial to small business are next to nil.  And our legislators in Washington are more interested in spending money and increasing the power of the federal government than they are in crafting policies which reduce the burdens on entrepreneurs and innovators, you know, those folks, who create products and deliver services which improve our lives and create jobs for citizens eager to find work.

Unless they change their way of thinking, we’re going to see even more shuttered storefront on the once bustling thoroughfares of Hollywood and other neighborhoods in the once Golden State.

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12 Comments »

  1. Similarly: earlier this year TGCpartner took a pay cut that wiped out any raises he’s had in almost 10 years with his company. Starting last week, salaried employees took an additional 23% cut and hourly employees will have to take an extra day off a week. Don’t know if it’s true, though I wouldn’t be surprised, but the rumor is these cuts are to help pay the Teamsters.

    Comment by ThatGayConservative — December 23, 2009 @ 4:07 pm - December 23, 2009

  2. Kalifonia broke? Really?

    Comment by skydancer — December 23, 2009 @ 5:14 pm - December 23, 2009

  3. “And many in the private sector. . . as friends with smaller salaries.”

    By most accounts I’ve read, the private sector is the ’smaller salary’ side. Government workers are highly overpaid – and likely unionized to boot!

    Comment by Jax Dancer — December 23, 2009 @ 6:50 pm - December 23, 2009

  4. This is why government flunkies are salivating over the prospect of government-run health insurance. It is especially the lower-level employees at insurance companies who will suffer if this happens. A bunch of tax-feeding clock-watchers, employed by the government, will get their jobs.

    Comment by Lori Heine — December 23, 2009 @ 8:14 pm - December 23, 2009

  5. Meanwhile, all the farm land along the 5 freeway that runs through the central valley is desolate once more. All this just for a fish.
    I love California but boy are we screwed.
    Nebraska is looking good these days.

    Comment by Leah — December 23, 2009 @ 8:24 pm - December 23, 2009

  6. Leah, you have to love the signs they’ve put up, though….something to the effect of “Government-Created Dust Bowl”.

    Comment by North Dallas Thirty — December 23, 2009 @ 8:55 pm - December 23, 2009

  7. Sorta OT: Remember when I said:

    Will TanogillieTimboob start using space to bemoan the fact that Obama’s a clever Rovian plot to make Bush look good?

    http://www.gaypatriot.net/2009/12/20/democrats-still-running-against-w/comment-page-1/#comment-526117

    Try this:

    Obama: A Republican Plant?
    by Bob Parks

    Many of us had no idea the Republican Party had it in them, but to devise and implement such a plan was ingenious. Think about it; party leadership acting totally inept while a charismatic young Democrat presidential candidate captures the imagination of the normally lethargic youth vote, captures the senior vote, women, and even sends a thrill up the leg of the media. And within a few short months after attaining the presidency, he conducts himself in a manner (personally and in office) that had not only invigorated his political opponents, but has them so energized they take to the streets and even march on The Capitol (more than once). One would have to conclude Barack Hussein Obama is either the most politically clueless president ever, or… is really a stealth Republican destroying the Democrat Party from within.

    Is Barack Obama a Republican plant?

    Read the rest.

    http://biggovernment.com/2009/12/22/obama-a-republican-plant/

    Comment by ThatGayConservative — December 23, 2009 @ 9:02 pm - December 23, 2009

  8. CA is going to hell in a handbasket. Where is our constitutional convention?

    Comment by Pomo — December 24, 2009 @ 2:33 am - December 24, 2009

  9. I know for the gaming industry, the small stores are hurting across the board (gee, in a depression, people can’t buy games, who’s a thunk it?) I try to patronize my local store, but some of the podcasters are trying to make a database of FLGS to direct business to them.

    Comment by The_Livewire — December 24, 2009 @ 6:39 am - December 24, 2009

  10. I was born and live in California. The Governator has been talking about another deficit this year. It is only going to be about 20 billion this year. All this shortly after a huge tax increase to cover last year’s deficit. Sacramento still hasnt received the memo regarding unemployment and everyone taking it in the wallet. Boxer and Feinstein havent really helped their constituents either – they continue to vote for more federal taxes while California is taxed to death.

    Comment by Duffy - Native Intelligence — December 24, 2009 @ 2:37 pm - December 24, 2009

  11. Credit for small business, hah! My banker won’t even talk to me about some cash to ease my liquidity problems…and I still have receivables in-excess of my payables.

    And my clients are dying from the lack of normal operating credit.

    Comment by Ted B. (Charging Rhino) — December 24, 2009 @ 11:40 pm - December 24, 2009

  12. Often we forget the little guy, the SMB, in our discussions of the comings and goings of the Internet marketing industry. Sure there are times like this when a report surfaces talking about their issues and concerns but, for the most part, we like to talk about big brands and how they do the Internet marketing thing well or not so well.

    Comment by alex — January 8, 2010 @ 12:35 am - January 8, 2010

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