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Start-ups giving SLO economy a boost

By   /   Friday, May 9th, 2008  /   Comments Off on Start-ups giving SLO economy a boost

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As a recession looms and the unemployment rate increases in the Tri-Counties, prospects for business are surprisingly upbeat.

According to data released by the California Economic Development Department, the unemployment rate across the region has increased by about 1 percentage point since the same time last year.
In such a challenging economy, San Luis Obispo Economic Vitality Corp., or EVC, President and Chief Executive Officer Michael Manchak said he would expect aspiring business owners to wait it out until conditions improve. But his organization has notices just the opposite.
Manchak said there has been a “fairly significant” increase in the number of people calling the EVC for resources on starting or expanding a business and seeking loan guarantees.
“In a soft economy, I would have expected that many people would wait on the sidelines to start a business, but we’re not seeing that,” Manchak said. “We’re seeing a lot of people saying, ‘This is our best option right now.’”
Manchak, however, said he did not believe the phenomenon was related to an increase in unemployment, but a lack of professional jobs. “That’s my personal opinion,” he said, adding that because workers across the region cannot find the “right” jobs to meet their education and professional level, they may be resorting to creating their own.
“We have a great quality of life and people love to live here, but we could use more private companies,” Manchak said, so the possibility of creating more businesses in San Luis Obispo County is just what the area economy needs. “Once here, many people that [start companies] here are globally successful and don’t plan to leave.”
In fact, Manchak said the EVC has fielded calls from companies in both Santa Barbara and Ventura counties that are considering moving operations to the north because the cost of trying to grow a business in other parts of the region is “becoming prohibitive.”
Bill Watkins, executive director of the University of California, Santa Barbara Economic Forecast Project, said some signs indicate the economy may be passed the worst of its downturn, although he warned California still has issues with its budget. He said some well-publicized solar project proposals in San Luis Obispo County could also be contributing to an increased interest in starting new businesses.
Meanwhile, the city of Goleta is exploring ways to generate tax revenues from business licenses, a move that could ultimately serve to encourage economic growth.
Unlike about 90 percent of the cities in California, Goleta does not charge a business license tax to most of the companies based within its boundaries, said Goleta City Manager Dan Singer. If it were to impose a business license tax similar to most other state municipalities, it could create an additional $600,000 to $900,000 in annual tax revenues.
“As a young city, we’re still struggling to be able to provide financial assistance to groups like the chamber of commerce and to some of the nonprofits and worthy organizations in town, and also to focus a bit on our actual business climate and our economics,” said Singer. “There are a number of studies we’d like to do relative to our economy and can’t really afford, and this would help to subsidize that.”
The city has hired a consultant to study the business license tax proposal. The result will be presented at the May 29 city council meeting or a special meeting soon after.
Singer said it is up to the city council to make a decision about the tax and designate what the money would be used for.
“I think there is a lot we can do to support our businesses that are currently here and aren’t yet here, and to work to retain the ones we have, but again to do that the city council needs to indicate that’s a priority, and to do that, we need funding,” Singer said.
The Goleta Chamber of Commerce held a roundtable discussion about the topic April 24. Kristen Amyx, president and chief executive officer of the chamber, said although Goleta’s proximity to the University of California, Santa Barbara, makes it a “naturally fertile ground” for entrepreneurs, she would like to see more formal economic development programs and activities in the area.
“Our goal at the chamber and what we’re working toward is to see if the city’s goal as well is to really try and nurture that soil even more, so we really focus on that sector of the business community and on our economic vitality,” Amyx said. “Of all the options out there to grow revenue for our city and to enhance the quality of life, I think where we’re headed is to focus on growth of entrepreneurial companies as our preferred method.”

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