The number of American small business owners reporting increases in company revenue this year are beginning to decline.
Small business owners report they are the most optimistic in seven years. Last month, 49% of small business owners reported that their revenues increased a little or a lot over the past 12 months, up from 37% a year ago.
The Wells Fargo/Gallup Small Business Index declined six points to 17, which virtually erases gains experienced earlier this year. The number of business owners expecting to be in a good financial position over the next 12 months declined seven percentage points to 59% and those expecting increased revenues in the next 12 months declined by six percentage points to 43%. Despite the decline in the Index score this quarter, business owner optimism has improved significantly from the Recession low point when the Index dipped to minus 28 (-28) in 3Q/10. With the number one reason cited for not making a small business investment being concern about the overall state of the economy, small business owners planning to make capital investments over the next 12 months say they intend to make them in new equipment/machinery (64 percent) and technology, such as computers (61 percent), new software or websites (56 percent), and mobile devices (52 percent). But business owners who said they plan to make a capital investment over the next 12 months say they are planning to pay for it using business revenue/profits (93 percent); credit (39 percent); and savings (31 percent).
America’s small business owners are the most optimistic since July 2008, according to the latest findings from the Wells Fargo/Gallup Small Business Index survey for the period Jan. 9. The Index now stands at positive 15 (+15) for January, compared to minus 3 (-3) in October and following two previous Index readings of zero (neither optimistic nor pessimistic). Revenues – 49% expect revenues to increase a lot or a little, up from 37% in Q4 2011. With this, 63% expect their company’s financial situation to be very or somewhat good over the next 12 months, up from 55% in Q4 2011. Meanwhile, 22% expect the number of jobs at their company to increase a lot or a little, up from 15% in Q4 2011; 8% expect the number of jobs at their company to decrease a lot or a little, down from 13% in Q4 2011. Only 15 percent said they are currently looking for new employees, while 76% of those who are not looking to hire employees don’t need any additional employees at this time; 71% are worried revenues or sales won’t justify adding more employees; and 66% are worried about the current status of the U.S. economy.
In keeping with the improving economy, falling consumer credit debt and bankruptcies leveling off, small business owners are maintaining their confidence. Showing increasing optimism for the second consecutive quarter, the Index score rose another 16 points this quarter, lifting out of negative territory to reach 12 on the Wells Fargo/Gallup Small Business Index survey, which gained 40 points since July 2010.
Also, this was the largest two-quarter gain in optimism recorded since August 2003. Always a strong indication of how well the economy’s doing, small business owners expect improvements in their financial situation, revenues, jobs and access to credit over the next 12 months, with 54% expecting an increase of a lot or a little, up from 44% in 4Q/10.
Specifically, 65% of small business owners expect their companies’ financial situation to be somewhat or very good, up from 59 percent in 4Q/10; 23% expect their employee headcount to increase a little or a lot, up from 18% in 4Q/10; and 36% expect credit to be somewhat or very difficult to obtain, down from 42% in 4Q/10.
Business owners are looking at a later retirement with 69% not planning to retire or cut back on work until age 65 or older reflecting a 17% increase since December â07 and a 28% increase over September â05. Meanwhile, those planning to retire before 60 decreased to 21% from 27% and those anticipating retiring before age 60 decreased to 11% from 21% in December â07. This, according to the Wells Fargo/Gallup “Small Business Index,” also shows 62% of business owners surveyed indicated that they made changes to their retirement strategy as a result of the economic downturn; 68% are worried about not being able to build back retirement savings lost during the recent economic downturn; and 63% are confident they will have enough money to live comfortably when they retire, compared to 79% in 2007. Small businesses account for most new hires and for 99.7% of all U.S. employers.
Fewer U.S. small business owners expect revenues, cash flow, capital spending and hiring to increase over the next 12 months. Credit conditions improved modestly for businesses in July, with 32% reporting it was âsomewhatâ or âvery difficultâ to obtain over the past 12 months, down from 36% in April. These findings, according to the July Wells Fargo/Gallup “Small Business Index,” also show 42% of business owners expect credit to remain âsomewhatâ or âvery difficultâ to obtain over the next 12 months as. This data translated to a 17-point decline from April in the surveyâs index of business owner confidence, finishing at (-28), the lowest score since the surveyâs inception. The Index is the sum of âpresent situationâ and âfuture expectationsâ of small business owners for six key measures. Future indications show 38% expect their companiesâ revenues to increase over the next 12 months; 43% expect their companiesâ cash flow to increase; 37% expect their companiesâ allocation for capital spending to decrease over the next 12 months; and 13% expect the overall number of jobs at their companies to increase. Presently, 36% rated their cash flow as somewhat or very good for the past 12 months.
A July survey has found that small business ownersâ optimism dropped to its lowest level in at least six years. The Wells Fargo/Gallup “Small Business Index” stands at -21, down 20 points from the previous survey in April, and 135 points lower than the Index high of 114 (November, 2006). This is the third consecutive quarter with a negative “Index” score. About 37% said they have “poor” cash flow issues, compared to 30% in the prior quarter. Nearly 58% said revenues were decreasing, compared to 51% in the previous quarter. The “Index” consists of two dimensions: 1) Ownersâ ratings of the current situation of their businesses and, 2) Ownersâ ratings of how they expect their businesses to perform over the next 12 months.
Small business ownersâ optimism dropped to its lowest level in the six
years that the Wells Fargo/Gallup “Small Business Index” has been
conducted. The score now stands at negative four (-4), down 14 points
from November and 118 points lower than the “Index” high of 114 set in
November, 2006. It is the first time the index has dropped below zero. A
score of zero indicates that small business owners, as a group, are
neutral — neither optimistic nor pessimistic — about their companiesâ
situations. The “Index” is the sum of “present situation” and “future
expectations” of small business owners for six key measures, including
financial situation, cash flow, revenues, capital allocation spending,
job hiring and credit availability. The “present situation” score
dropped eight points to negative five, and “future expectations” dropped
six points to one.
A new survey shows that more than one-third of small business owners said that their personal financial situation as a whole is getting worse. According to the Wells Fargo/Gallup “Small Business Index” survey, 50% of the business owners surveyed said they’ve postponed a major purchase in the past three months, and 44% said they’ve reduced the amount of money they’ve deposited into savings, checking or a CD. Seventy-five percent have concerns about paying for gas, while 51% are worried they will not have enough money for the next 12 months’ regular medical and dental expenses, and almost half fear they will not have enough money to pay for unforeseen medical emergencies.
According to the latest Wells Fargo Gallup survey, small business owner optimism is at a five-year low with the “Small Business Index” having dropped 35 points since January to reach its lowest level since August 2003. The 35-point drop is the Index’s largest quarterly decrease to date, which has been on a steady 5-quarter decline and is currently at 48, a 66-point drop from the Index’s highest score of 114 in December 2006. Satisfaction among the small business owners, however, was down only 4 points from January to 86% while 94% feel successful in their role as a small business owner.
Even though credit availability is tightening, small business owners remain optimistic. The quarterly “Wells Fargo/Gallup Small Business Index” found that small business owners’ current view of the operating environment and financial conditions slipped eight points to 41 in July since the last quarterly reading in April. The percentage of small business owners saying obtaining credit was somewhat or very easy fell five points to 48%. Future expectations fell five points from April to 59, the lowest level since June 2005. The survey also noted that declining home prices, high consumer debt levels, and rising food and energy prices have reduced the consumers’ willingness and ability to spend in other areas.