Small business confidence in Nevada's economy growing

RENO, Nev. — Judging from the results of Nevada State Bank’s fifth annual 2018 Small Business Survey, confidence in the Silver State’s economy is at an all-time high.

In a telephone survey conducted in January of 402 business owners, operators and senior management from around the state, nearly nine out of every 10 (87.3 percent) said Nevada’s economy is heading in the right direction, which marks the highest-ever confidence percentage for the survey, according to the bank.

It’s also a big jump from 77 percent from 2017, and nearly twice as more (47.6 percent) than in 2013.

Further, 56 percent of respondents believe Nevada’s business climate has gotten better than last year, an increase from 44.7 percent in 2017. The survey also reported nearly 68 percent of respondents said the business environment would get better in the next 12 months.

Much of the positive vibes stems from the state’s continued growth, said Terry Shirey, president and CEO of Nevada State Bank, as well as national and state political environment that appears intent on making sure businesses have the resources to thrive.

The Trump Administration’s massive tax bill signed last December, which calls for sweeping tax cuts for businesses, is a key reason for the unprecedented confidence, he added.

“In general, the current administration has taken a lot of business-friendly actions that put more money in businesses and in turn, consumers’ pockets,” Shirey said in a recent interview with the NNBW.

He added that recent changes in California tax laws — which seem to drive many businesses, families or individuals out of the state for greener pastures — is another aspect working in Nevada’s favor.

Further analysis in the 2018 survey points to more positive signs for the state’s economy. Fifty-two percent of companies surveyed indicated they earned higher revenues, and 70 percent expect them to continue to grow in 2018.

It also appears companies are taking a conservative approach in expanding operations in 2018. Forty-two percent of respondents expect to hire more staff, and 22 percent expect to relocate, expand or renovate workspaces in the next 12 months.

“Business owners learned a lot of lessons from the last recession,” Shirey told the NNBW. “I think they are more cognizant of spending money while ensuring their cash flow and reserves are able to support their business.”

Similar to the previous three years’ surveys, chief concerns among business owners include a lack of qualified or experienced workforce, as well as uncertainties in the health care industry, along with government regulations.

Shirey also alluded to Northern Nevada’s housing crisis, in that the lack of more affordable housing options could be a deterrent for workforce coming into Reno-Sparks from other states.

Part of the problem is that average wages generally have not kept up with the rising cost of living in Northern Nevada. According to the website payscale.com, the average salary in Reno, for instance, currently is $48,205, down 1.6 percent from the fourth quarter of 2017. The current cost of living ,however, is 7 percent higher than the national average.

While only about 32 percent of businesses surveyed recruit employees out of state, that’s still a jump from 2017, when only 26 percent said they look elsewhere to fill open positions.

Despite these concerns it appears Nevada’s economy should be healthy at least for the foreseeable future, although, as Shirey points out, another recession is inevitable at some point.

But he believes the state, with a diversified and stable economy and savvy business practices, is more prepared to withstand another economic downturn.

“Now we have much better economic foundation to handle the next downturn, rather than in 2007 when it was based mostly on a speculative real estate market,” he explained.

Applied Analysis, an economic and financial analysis firm based in Las Vegas, conducted the survey.

Companies who responded ranged in annual sales of $250,000 to $10 million, according to Nevada State Bank.