Looking at the year ahead, business owners anticipate strong
revenues, cash flow and capital spending; rate current
administration on key issues
Small business owners entered the new year feeling the most
optimistic since early 2007, according to findings from the latest
Wells Fargo/Gallup Small Business Index conducted January 3–9.
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Small Business Optimism Reaches Eleven
Year High (Graphic: Business Wire)
In the latest quarterly survey of small business optimism, the
overall Index score came in at 107, up from 103 in November 2017,
and the highest score since early 2007. A jump in the “future
expectations” score – which measures how business owners expect
their businesses to perform over the next 12 months – largely drove
the improvement in optimism. In January, the score improved five
points to 65, the highest reading since December 2006, the last
time the “future expectations” score finished at 65.
“The economy ended 2017 on a high note, and many small business
owners believe that strong momentum will carry over into 2018,”
said Mark Vitner, Wells Fargo Managing Director and Senior
Economist at Wells Fargo. “We are encouraged by the breadth of the
improvement this past year, particularly in quantifiable areas like
sales and overall finances. The more broad-based the gains, the
more likely those gains will be longer lasting.”
In January, 52 percent of business owners reported their revenue
increased a little or a lot over the past 12 months, up from 46
percent in November 2017 and the highest reading on this measure
since 2007. The survey also showed that many business owners
anticipate strong revenues in the year ahead, with 66 percent
saying they expect their company revenues to increase over the next
12 months, which is the highest reading on this measure in the
history of the survey. Other key drivers in the first quarter
included:
- Healthy cash flow outlook –
Three-fourths (77 percent) of business owners expect their cash
flow will be very good or somewhat good over the next 12 months, up
from 73 percent in November 2017 and the highest reading on this
measure in the history of the survey.
- Improvements in capital spending
– Thirty-eight percent expect the amount of money their business
allocates for capital spending to increase a little or a lot over
the next 12 months, compared to 33 percent in November 2017. This
is the highest this measure has been since December 2003, when it
was also 38 percent.
- Ease of obtaining credit –
Forty-six percent expect credit will be very easy or somewhat easy
to obtain, compared to 45 percent in November 2017.
- Continued hiring – A third (33
percent) of business owners expect the number of jobs at their
company to increase in the next 12 months, up one percentage point
from November 2017.
“Our latest survey tells us that small business owners feel
better about the economy and the future of their businesses,” said
Andy Rowe, head of Customer Segments at Wells Fargo. “We are
encouraged to see more business owners forecasting strong revenues,
healthy cash flows, and increased capital spending over the next 12
months. These trends tell us that small business owners are more
positive about the economy, and that optimism is translating into
investment in the future of their businesses right now.”
Small business owners rate presidential administration on key
issues
The administration generally receives high marks on economic
issues affecting small businesses, but lower marks on non-economic
issues, such as infrastructure improvements, international
relations and healthcare reform.
In January, business owners were asked about the current
presidential administration and its impact on their businesses.
More than half of survey respondents (58 percent) said the current
administration understands the issues that are important to their
business and another 58 percent said the administration cares about
these issues. Fifty-six percent said the administration prioritizes
these issues, and 55 percent said the administration is effective
at addressing them. When asked to give the current administration a
grade on its performance on issues important to their business over
the past year, about half (49 percent) gave the administration an
“A” or “B,” and a quarter of respondents gave the administration an
“F.”
When it comes to key issues impacting small business owners, 61
percent said the current presidential administration is doing a
very good or somewhat good job of improving the overall economy,
and 53 percent said the administration is doing a very good or
somewhat good job of job creation. Looking at taxes, 50 percent
said the current administration is doing a very good or somewhat
good job on tax reform that impacts small business owners
specifically, and 49 percent said it is doing a very good or
somewhat good job on tax reform overall.i Regulation reform has
been another key issue for business owners, and on the survey, 46
percent said the current administration is doing a very good or
somewhat good job of regulation reform impacting small business
owners.
However, on non-economic issues, small business owners said that
the current administration is doing a very poor or somewhat poor
job on healthcare reform (50 percent), international relations (45
percent) and infrastructure improvements, such as roads and bridges
(38 percent.)
Small business top challenges
In January, business owners were asked to identify the most
important challenge facing their businesses today. Attracting
customers and finding new business rose to the top of the list at
16 percent, followed closely by hiring and retaining high quality
staff at 13 percent. Other top concerns this quarter included
financial stability and cash flow (10 percent), taxes (10 percent),
government regulations (7 percent) and competition/larger
corporations/internet (7 percent). These challenges have been
consistently reported as the top concerns of small business owners
since early 2013, although the order of concerns shifts from
quarter to quarter.
Wells Fargo/Gallup Small Business Index Scores: Q1 2017 – Q1
2018
Overall IndexScore
PresentSituation
FutureExpectations
Q1 2018 (Surveyed January 2018) 107 42
65
Q4 2017 (surveyed October 2017) 103 43
60
Q3 2017 (surveyed July 2017) 106 45
61
Q2 2017 (surveyed April 2017) 95 36
59
Q1 2017 (surveyed February 2017) 100
40 60
About the Wells Fargo/Gallup 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,
with annual revenues up to $20 million, in all 50 United States
conducted Jan. 3-9, 2018. 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. The highest Index reading was +114 in the fourth quarter of
2006, and the lowest reading was -28 in the third quarter of
2010.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investments, mortgage, and consumer and commercial finance through
more than 8,300 locations, 13,000 ATMs, the internet
(wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 263,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations. News, insights and
perspectives from Wells Fargo are also available at Wells Fargo
Stories.
Wells Fargo serves approximately 3 million small business owners
across the United States and loans more money to America’s small
businesses than any other bank (loans under $1 million, 2002-2016
Community Reinvestment Act government data). To help more small
businesses achieve financial success, Wells Fargo introduced Wells
Fargo Works for Small Business® – a broad initiative to deliver
resources, guidance and services for business owners. For more
information about Wells Fargo Works for Small Business, visit:
WellsFargoWorks.com. Follow us on Twitter @WellsFargoWorks.
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.
__________________________
i The Q1 Wells Fargo/Gallup Small Business Index survey was
conducted January 3-9, 2018. President Trump signed the rewrite of
the tax code into law on December 22, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180125005130/en/
Media contactsAlice Hartnett,
704-715-9115@AHartnettWFalice.hartnett@wellsfargo.comSarah DuBois,
612-466-7484@SDuboisWFsarah.dubois@wellsfargo.com
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