Marin leads California in study on small businesses

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Marin County ranks No. 1 in the state in the relative strength of its small-business sector, according to a new study.

Researchers with the financial technology firm SmartAsset used Internal Revenue Service data for the study. It compared overall small-business revenue in relation to population to determine that the county has the strongest small-business presence and is thus the most attractive for proprietors.

Rounding out the top five counties in the state are Nevada, Mono, Los Angeles and Orange, according to the study. Marin County also placed 47th overall in the U.S.

The study measured factors such as how many people in a county received small-business income in relation to its population; the reported business income; the amount of tax residents might pay on income; and the five-year change of both small-business tax returns and income.

It also compared the county’s overall income to its small-business income, and the change over a five-year period. The highest-ranked counties had the strongest small-business presence based on these qualities and were considered the best places for such enterprises.

Based on these factors, 42.3% of Marin’s population filed small-business taxes — almost 10% higher than the second-ranked Nevada County. The study also showed 15.6% of the population claimed small business income.

But is it the best place for small businesses in the state? Reaction in Marin’s business community, in some sectors still feeling the economic effects of the pandemic, was mixed.

Bishlam Bullock, founder and owner of hair boutique Salon B in San Rafael, said the study rang true to him. He has owned his business for more than 20 years and has never had a bad year — even during the pandemic. He grew up in Marin City and picked Marin because he felt it would be a successful venture.

“It’s a very wealthy location, I know, I grew up in it,” he said. “I knew that the clientele had the financial means to support what you put out, so long as you’re doing quality things and are consistent. ”

Jim Welte, executive director of the Mill Valley Chamber of Commerce, said the study seems to match what he already knows: The area has a lively small-business community. He said four out of the five commercial areas in Mill Valley are centered on small businesses.

“Mill Valley is very much a mom-and-pop-centric town,” Welte said.

Denzel Allen, founder and owner of Strength Den, said Mill Valley has been a great place for his gym, which he’s owned since 2018. He credits some of this to the nature of smaller communities and recommendations from clients.

“Word of mouth goes a long way out here,” he said. “It’s definitely been a positive experience.”

Mike Blakeley, chief executive officer of the Marin Economic Forum, viewed the study as upbeat, saying it shows that Marin has a thriving small-business sector and, relative to other counties in the state, a higher proportion of its population is engaged in small businesses.

“That’s a really positive sign, because from an economic perspective, most economic growth and job creation comes from small businesses,” Blakeley said.

But he also said the study is a bit misleading. It shows that a larger proportion of people in Marin, compared to the rest of the state, file taxes as a business, but he noted that a business owner might operate nationally and just happen to live in Marin.

Additionally, he said the idea that small businesses are doing well in Marin, something the study implies, is complicated for the same reason, as well as the fact that every business is different.

“It doesn’t comment on the local business environment,” he said. “That this is the best place for small businesses … I wouldn’t agree with that title. I would say this is a place where a lot of successful business people live and file taxes as a small business.”

Many pointed out that various agencies define “small businesses” differently — some by income, others by number of employees. The SmartAsset study used IRS small-business income data; the IRS defines small businesses as those with assets under $10 million.

Miriam Karell, director of the Marin Small Business Development Center, was also cautious about calling Marin the best place for such operations. She said while it seems accurate, one thing she does not see reflected is the cost of living. Marin is often considered one of the more expensive counties in the country.

She noted that Humboldt County ranked in ninth place in the study, but has a significantly different cost of living from Marin. According to the Massachusetts Institute of Technology, a living wage in Humboldt is $16.51 for one adult with no children, compared with $26.53 in Marin. Karell said that because of the costs of retail or operating space, many businesses end up moving to Sonoma County.

While COVID-19 the pandemic has waned, there are still a lot of empty storefronts all over Marin. Karell said the question remains how many businesses will return to fully in-person operations.

Karell said a trend she’s seen in the past year alone is more people looking to sell their businesses, and some that have been open for 20 or 30 years are closing their doors.

“The pandemic was the last straw for them,” she said.

Karell said the pandemic exacerbated many of the issues small businesses were already facing, such as debt, a tough loan environment, staffing and the cost of materials. She said many businesses are not back to pre-pandemic income levels yet.

While some businesses were able to pivot during the pandemic — offering online services or developing new ideas to generate income — some haven’t been.

Welte said the post-pandemic business environment has been a “mixed bag,” and often hard. He pointed to post-pandemic infrastructure improvements as having a significant impact. In Mill Valley, there were three or four construction projects happening at once, causing struggles for businesses.

“Our business owners are incredibly resilient and creative, and like in any town, found ways through a pretty horrific pandemic and are still finding ways to work through infrastructure updates that, frankly, everyone hates but we all need,” he said.

Bullock said he pivoted during the pandemic by making his salon’s waiting room into a boutique store and offered small comfort items he noticed people were craving, like candles and at-home hair coloring kits.

Allen moved training sessions outside at various parks, and offered online coaching.

Joanne Webster, chief executive of the San Rafael Chamber of Commerce, said the study is another reason to support small businesses.

“It validates what I already knew; that Marin is a great place to do business and that small businesses are the backbone of Marin’s economy,” she said in an email. “Nearly 90% of all businesses in the county are considered small. They provide tens of thousands of jobs and generate the taxes needed for Marin’s economic engine to run.”

Karell added that small businesses do more than just support the local economy, they boost the quality of life.

“As a resident, what makes you thrive?” she said. “Access to groceries, to clothes, to entertainment, to food you don’t have to cook yourself. … I don’t think we realize how much we rely on small businesses, how much they enhance our daily life and our quality of life.”

While big chains could potentially fill those needs, Karell said they are often very different in quality or are not as personable. With a small business, customers often know the owner.

“In most cases, when you walk in, the first person you see is the owner, or maybe the owner’s kid,” Welte said.

Allen said small businesses help build community because people have a sense of who the owner is as a person.

“Most small-business owners are using their businesses to help support their life and their livelihood, whereas a lot of bigger franchises don’t necessarily need the income from their business to support their life,” Allen said.

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