Northern Nevada businesses adjusting the way they do business
It's been said that a recession is a terrible thing to waste, and northern Nevada businesses aren't wasting this one.
In the most recent Sierra Region Economic Outlook Business Survey (year-end 2010), released today by the Center for Regional Studies at the University's College of Business with InfoSearch International, 74 percent of the responding businesses reported that they had taken steps to reposition, repurpose or reinvent their business models. Within the next year, 54 percent are considering adding a new product line or service, expanding into new markets, or acquiring a complementary business or competitor.
The survey has been conducted since 2004, with the University's Center for Regional Studies and InfoSearch taking over sponsorship of the project in 2009. The primary objective is to measure business leaders' opinions about the regional business environment, but the survey also includes some questions about current hot topics that may affect businesses. It also includes an Economic Outlook Index (EOI), which in this survey, was the highest it's been, 71.5, since 2006, when it was 88.7. The EOI bottomed out in 2008, when it was just 45.7. In 2009, it rose to 62.8, and at midyear 2010, it held at 62.2. The EOI mirrors a national methodology based upon six components, designed to measure and track the change in the economic outlook over time.
"Generally, the survey, including the index, is showing a slight upturn in the business outlook by our area's business leaders that is continuing since the most bleak outlook in 2008," said Brian Bonnenfant, project manager at the University's Center for Regional Studies. Other survey results that reflect this gradual positive trend include:
- Only a third of the respondents said the overall economic conditions in the region had worsened compared to a year ago. At midyear 2010, half of the respondents said conditions had worsened; in 2009, 56.3 percent said they had worsened; and in 2008, 94.0 percent said they had worsened.
- The percent of respondents expecting the economic conditions in the region to improve over the next 12 months, 32.9, was the highest since 2006, when it was 35.1 percent. In 2008, it was just 19.2 percent.
- More respondents, 37.5 percent, expect their revenues to increase over the next 12 months, than to decrease, 20.6 percent.
- While 22.9 percent of respondents expect to increase their number of employees over the next 12 months, only 14.6 percent expect to decrease their number of employees.
Still, Bonnenfant is quick to point out that the survey's results can't be characterized as all positive, considering that 44 percent of respondents rated the current overall economic conditions in the region as poor, and 15 percent rated the conditions very poor, about the same as at midyear 2010.
"What this survey indicates is that the current economic conditions still aren't very good, but that businesses are expecting them to get better within the next year," he said. "And importantly, it indicates that businesses are being innovative and taking the steps they need to in order to survive and come out of this recession positioned to thrive as the economy recovers."
Bonnenfant also reported that in a "hot topic" question, nearly half (47 percent) reported that state budget cuts would have a negative impact on their business, while only 11 percent reported the cuts would have a positive impact on their business. Twenty-eight percent said the cuts would have no impact, and 15 percent did not know or did not provide a response.
In another hot topic question, respondents said to diversify and grow the northern Nevada economy, the industries or clusters they would like to see develop in the region most are manufacturing, 28.8 percent; energy, 19.6 percent; and technology, 19.6 percent.
"We are seeing a consistent theme in this survey and discussions we are having with local businesses," commented Greg Mosier, dean of the University's College of Business. "They know we need to diversify our economy by investing in newer industries, such as alternative energy and technology, as well as by continuing to invest in more established industries that can continue to grow, such as manufacturing."
A total of 525 leaders responded to the online survey from January 10 to February 3, 2011. Three-quarters of the respondents were business owners, presidents/CEOs or managers/directors. Others were executives, partners, or government or other workers. About three-quarters of the respondents have their place of business in Washoe County. The rest of the businesses were in nearby Nevada counties, except for 2 percent, which were in nearby California counties. Responses came from businesses of all sizes and from a broad range of types of businesses and industries, similar to past surveys. View the survey results free of charge.