Published in Cooperation Between San Benito and Oanda
San Benito County, California, is experiencing notable growth in its business sector, particularly in small businesses. However, like many regions in the United States, it faces various financial challenges and opportunities that shape the local economy. Discover the financial landscape of businesses in San Benito, shedding light on the current economic climate, budgetary concerns and the broader trends affecting local enterprises.
Dominated by Small Businesses
San Benito County’s population has seen steady growth, although at a moderate pace. As of 2023, the population has increased to approximately 67,000, reflecting a growth rate of about 1 percent annually, slower than the 2.25 percent seen between 2021 and 2022. This is due to a combination of factors, including affordability relative to neighboring regions like Silicon Valley, which continues to attract new residents despite housing and infrastructure challenges.
Small businesses in San Benito are integral to and dominate the local economy. As of 2024, there were approximately 4,900 small businesses in the county. Interestingly, most of these businesses are classified as “very small,” having fewer than 20 employees.
Additionally, self-employment has risen by more than 20 percent over the last decade, reflecting national trends like the gig economy and the “Great Resignation,” where workers have increasingly sought entrepreneurial ventures and freelance opportunities.
The Impact of Inflation and Labor Shortages
Like much of the nation, businesses in San Benito have been hit hard by inflation. Supply chain disruptions and rising costs of goods have made it difficult for local businesses to maintain profitability.
Business owners have issues with product pricing and find it difficult to retain long-term employees. These challenges are mirrored in many parts of the United States, but according to some merchants, the local government’s inconsistent communication and regulations have exacerbated the problem in San Benito.
Complex permitting processes also create bureaucratic hurdles for small businesses, which add to their financial burden.
Risk Management
One way small business owners could mitigate the negative effects of inflation is by developing a currency risk management strategy. Various factors, including inflation rates, interest rate changes and geopolitical events, can influence the currency market.
For example, if a local business expects the U.S. dollar to weaken against the euro due to inflation, they might consider hedging strategies. These might include forward contracts or options to protect themselves against adverse exchange rate movements.
With a currency option, buying or selling a currency at a predetermined exchange rate on or before a specific date is possible. This is profitable for businesses if the market rate is unfavorable at the time of sale.
Currency Trading for Profit and Protection
San Benito business owners may also see currency trading as generating additional revenue. Learning about forex markets and identifying trends in currency values will help savvy business owners turn currency trading into a supplemental income stream. Given that inflation erodes purchasing power, finding alternative income sources like trading EURUSD or other currency pairs online could protect a business’s bottom line in challenging economic times.
Initiatives That Support San Benito Businesses
San Benito’s financial management plays a significant role in supporting its business community. The county’s FY 2023–2024 budget is over $300 million, with $28 million invested in road improvements. This can benefit local businesses by improving accessibility and logistics.
Furthermore, the Economic Development Corporation (EDC) of San Benito County has identified two key tax incentives to support new businesses considering setting up shop in the area:
- Opportunity Zones: San Benito has designated Opportunity Zones, such as Census Tract #2, where companies can benefit from long-term tax savings if they commit to developing in these regions. This program aims to stimulate economic growth in underdeveloped areas while providing substantial tax benefits to businesses over time.
- New Markets Tax Credit: The second federal tax incentive available in San Benito offers businesses a 39 percent tax credit spread over seven years for projects in eligible zones. This credit is designed to encourage investment in low-income census tracts.
The EDC offers tax credits and small loans to support local businesses with limited access to capital. Reimbursement grants, such as the Commercial Façade Improvement Grant and the Rent Subsidy Grant, also provide financial assistance for businesses aiming to improve their physical presence or offset initial operational costs.
Strategic Location
San Benito County benefits greatly from its strategic location near Silicon Valley. Being close to this tech hub is an excellent opportunity for local businesses to connect with innovative companies. For example, the agriculture sector is benefiting from the developments in AgTech thanks to Silicon Valley’s thriving technology sector.
Furthermore, the area’s position between these regions fosters a “bedroom community” effect. Many residents commute to Silicon Valley for higher-paying jobs while spending in San Benito, contributing to the local economy.
However, this out-commuting pattern highlights the need for more local employment opportunities to keep the economic benefits within the county.
A Mixed Outlook for San Benito Businesses
The financial outlook for businesses in San Benito is mixed. On one hand, the county is seeing steady growth in small businesses and self-employment, which suggests a resilient entrepreneurial spirit. On the other hand, challenges in attracting large-scale investment and a limited skilled workforce pose barriers to economic expansion. However, with continued investment in infrastructure, targeted support for small businesses and strategic financial management, San Benito has the potential to build on its strengths and create a more dynamic and diverse economy. Entrepreneurs and business owners in the county can capitalize on these trends by aligning their ventures with the county’s development goals and staying attuned to broader economic shifts that could impact their operations.
