Small business owners are the most optimistic they have been in five
years, according to the latest Wells
Fargo/Gallup Small Business Index, and expect their businesses to
increase cash flow and hire more employees in 2014.
In a small
business survey conducted Jan. 6-10, the overall score increased to
a positive 45 (+45) in January, up from a positive 24 (+24) in October
2013. While this score is the highest it has been since the third
quarter of 2008, it is still well below pre-recession levels.
Several factors contributed to this quarter’s increase in small
business optimism compared to fourth quarter 2013:
-
Improved cash flow: In the January survey, more small business
owners said they had good cash flow over the past 12 months than they
did last quarter (52 percent compared to 46 percent). A larger
majority of business owners also expect to have good cash flow in 2014
(57 percent compared to 52 percent).
-
Increasing hiring: More small business owners said they expect
to increase hiring in the next 12 months than in last quarter’s survey
(22 percent compared to 16 percent).
-
Increasing revenue: A larger percentage of small business
owners expect their revenue over the next 12 months to increase (48
percent compared to 44 percent).
-
Accessing credit: Fewer small business owners in the current
survey reported having difficulty obtaining credit than did so last
quarter (23 percent compared to 27 percent).
“There are many reasons for small business owners to view 2014 as a
promising year,” said Lisa Stevens, Wells Fargo lead executive for Small
Business. “There’s less uncertainty in the economy than there has been
for quite some time. Congress approved a federal budget deal at the end
of last year. The stock market performed well in 2013, and capital
spending has picked up. With each piece of good news, business owners
gain a little more confidence to grow and expand. We know that small
business owners still face many challenges, yet hope this momentum
continues as the economy improves further.”
Challenges
When business owners were asked to identify the most important challenge
facing their businesses, several concerns rose to the top of the list.
In January, business owners once again said their top concern was
finding new business (21 percent). Other top concerns included the
economy (11 percent), government regulations (11 percent), hiring (8
percent) and healthcare (8 percent).
The Future – Retirement
In the January survey, small business owners were also asked about planning
for retirement. A majority of small business owners said they aren’t
ready to sell their businesses or stop working yet. More than half of
business owners said they estimate the best time to sell would be in the
next 1-10 years. About a quarter of those surveyed said the best time
would be more than 10 years from now. Yet, a majority of business owners
said they are not worried or not too worried about being able to sell
their businesses when they are ready (62 percent).
In the January survey, a majority of small business owners (55 percent)
said if money were no object they would opt to continue working full or
part-time, while 26 percent said they would retire completely, 13
percent would start another business and only 4 percent would choose to
work for someone else.
Small business owners still have some financial concerns about
retirement but are feeling a little more optimistic: About two-thirds of
small business owners (66 percent) anticipate that they will have enough
money to live comfortably in retirement (up from 63 percent in third
quarter 2010, when businesses were last surveyed on retirement).
-
More than half of business owners (57 percent) are either very or
moderately worried about not being able to pay medical costs for a
serious medical issue in retirement. In third quarter 2010, 64 percent
were worried. About half of business owners (55 percent) are either
very (26 percent) or moderately worried (29 percent) that they will
not have enough money in retirement. The percentage reporting worry in
third quarter 2010 was 64 percent.
-
Fewer business owners are worried about building back retirement
income lost in the recession (50 percent are either very or moderately
worried, down from 68 percent in third quarter, 2010). This latest
finding may indicate that small business owners are feeling more
positive about the performance of retirement funds and the market in
general.
Small Business Index Key Drivers
Wells Fargo, together with Gallup, surveys small business owners
quarterly across the nation to gauge their perceptions of their present
situation (past 12 months) and future expectations (next 12 months) in
six key areas: financial situation, cash flow, revenues, capital
spending allocation, hiring, and credit availability.
Wells Fargo/Gallup Small Business Index Scores: Q3 2012 – Q1 2014
|
|
|
|
Overall Index Score
|
|
|
|
Present Situation
|
|
|
|
Future Expectations
|
Q1 2014 (surveyed January 2014)
|
|
|
|
+45
|
|
|
|
+16
|
|
|
|
+29
|
Q4 2013
(surveyed October 2013)
|
|
|
|
+24
|
|
|
|
+7
|
|
|
|
+17
|
Q3 2013
(surveyed July 2013)
|
|
|
|
+25
|
|
|
|
+4
|
|
|
|
+21
|
Q2 2013
(surveyed April 2013)
|
|
|
|
+16
|
|
|
|
+2
|
|
|
|
+14
|
Q1 2013 (surveyed January 2013)
|
|
|
|
+9
|
|
|
|
-2
|
|
|
|
+11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About the Small Business Index
Since August 2003, the Wells Fargo/Gallup Small Business Index has
surveyed small business owners on current and future perceptions of
their business financial situation. The Index consists of two
dimensions: 1) Owners’ ratings of the current situation of their
businesses and, 2) Owners’ ratings of how they expect their businesses
to perform over the next 12 months. Results are based on telephone
interviews with 603 small business owners in all 50 United States
conducted January 6-10, 2014. The overall Small Business Index is
computed using a formula that scores and sums the answers to 12
questions — six about the present situation and six about the future. An
Index score of zero indicates that small business owners, as a group,
are neutral -- neither optimistic nor pessimistic -- about their
companies’ situations. The overall Index can range from -400 (the most
negative score possible) to +400 (the most positive score possible), but
in practice spans a much more limited range. The margin of sampling
error is +/- four percentage points.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified,
community-based financial services company with $1.5 trillion in assets.
Founded in 1852 and headquartered in San Francisco, Wells Fargo provides
banking, insurance, investments, mortgage, and consumer and commercial
finance through more than 9,000 stores, 12,000 ATMs, and the Internet (wellsfargo.com),
and has offices in more than 35 countries to support the bank’s
customers who conduct business in the global economy. With more than
270,000 team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 25 on
Fortune’s 2013 rankings of America’s largest corporations. Wells
Fargo’s vision is to satisfy all our customers’ financial needs and help
them succeed financially. Wells Fargo perspectives are also available at blogs.wellsfargo.com.
About Gallup
For more than 70 years, Gallup has been a recognized leader in the
measurement and analysis of people’s attitudes, opinions and behavior.
While best known for the Gallup Poll, founded in 1935, Gallup’s current
activities consist largely of providing marketing and management
research, advisory services and education to the world’s largest
corporations and institutions.
Note: Complete survey results available upon request or on the Wells
Fargo Business Insight Resource Center.
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140205005712/en/
Copyright Business Wire 2014