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Small Business Owners Are More Optimistic, Survey Finds

A bounce after three consecutive quarters of decline.

Small business owners expressed a level of optimism not seen in a year in the latest Wells Fargo/Gallup Small Business Index, which was conducted January 11-15. The index’s overall score rose to 67, a 13 point gain from November’s survey.
The quarterly survey, which measures the optimism of small business owners, had previously declined for three consecutive quarters, falling to an overall score of 54 in November. The January increase was the largest quarter-over-quarter increase since January 2015, when the Index also rose 13 points.
The bounce in optimism benefitted largely from small business owners feeling better about their cash flow, with 60% saying their cash flow was very or somewhat good over the past 12 months – a level not seen since the fourth quarter of 2007.
Looking ahead, 66% of business owners expect their cash flow to be very or somewhat good in the next 12 months, compared to 63% in November. Most other Index measures had small increases or were unchanged in the first-quarter survey.
Also boosting the January Index score was the forward-looking outlook of business owners. Small business owners reported feeling more positive about the next 12 months, as the survey’s future expectations score rose eight points to 41 in January from November’s score of 33. The present situation score – how business owners rate current conditions for their business – also improved, climbing five points to 26 in January from November’s score of 21.
When business owners were asked to identify the most important challenge facing their business, 14% cited attracting customers and finding new business as the top concern. Other top concerns included the economy (11%), hiring and retaining quality staff (11%), and government regulations (9%). These challenges have been consistently reported as top concerns of small business owners since early 2013, although the order of concerns shifts from quarter to quarter.

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