Small business owners report high optimism levels, share
insights on managing business seasonality
Small business optimism continues to climb in the third quarter
as business owners said they are the most optimistic in more than a
decade, according to findings from the Wells Fargo/Gallup Small
Business Index, conducted July 10–14.
In the quarterly survey, which measures the optimism of small
business owners, the overall Index score jumped to 106 in July – an
11-point increase from 95 in April and the highest since 113 in
April 2007. The increase in optimism was driven by several factors,
including:
- Strong financial situation –
Seventy-six percent said their current financial situation is very
good or somewhat good, up from 73 percent in April.
- Healthy revenues – For the
second quarter in a row, almost half (46 percent) said their
business’s revenue increased over the past 12 months, up from 41
percent a year ago.
- Ease of obtaining credit –
Nearly half of small business owners (48 percent) said credit will
be somewhat easy or very easy to obtain over the next 12
months.
- More hiring – Twenty-one percent
said the number of jobs at their company increased over the past 12
months, up from 19 percent in April.
“Our latest survey tells us that small business owners continue
to feel confident about their current situation and are optimistic
about the future,” said Mark Vitner, Managing Director and Senior
Economist, Wells Fargo. “As the economy strengthens, small business
owners are reporting improvements in their day-to-day operations,
particularly their sales. With their finances in better shape and
fewer business owners expressing concern about the regulatory
environment, more businesses are planning to boost capital spending
and hiring. It’s reassuring to see these improvements, and to see
that optimism has returned to its highest level since
early-2007.”
Managing Business Seasonality
In the survey, small business owners were asked about the
seasonal cycles that their businesses experience during the year.
Forty-five percent reported they have predictable times of the year
that are significantly busier or slower than others.
They also were asked how they manage their business operations
during the ebb and flow of the seasons. To offset the slow months,
62 percent said they reduce their capital expenditures, and 43
percent said they reduce hours for their employees. Thirty-nine
percent cut back their own personal hours of work. During busier
times most business owners (77 percent) said they increase the
number of hours they personally work, more than half (55 percent)
increase their employees’ hours, and 40 percent hire new seasonal
or part-time employees.
When it comes to handling business finances throughout the year,
41 percent of business owners said seasonal differences make it
more difficult to manage cash flow. During slower times of the
year, one in five (21 percent) reported increasing their use of
business lines of credit or business credit cards to bridge cash
flow gaps. During busier times, two-thirds (64 percent) said they
pay down debt or reduce their use of credit.
Small Business Challenges
When business owners were asked to identify the most important
challenge facing their business today, hiring and retaining quality
staff was at the top of the list, at 13 percent. This was followed
by attracting customers and finding new business (12 percent);
taxes, government regulations and financial stability/cash flow (9
percent); there was a decline in mentions of the overall economy (5
percent), down from 10 percent in April.
Small Business Index Key Drivers
In July, the “present situation” score – how business owners
gauge their perceptions over the past 12 months – jumped to 45, up
from 36 in April and marking the highest point since April 2007.
The “future expectations” score – how business owners expect their
businesses to perform over the next 12 months – rose two points to
61, also the highest since April 2007.
Wells Fargo/Gallup Small Business Index
Scores: Q3 2016– Q3 2017
Overall Index
Present
Future
Score
Situation
Expectations
Q3 2017 (surveyed July 2017) 106
45 61
Q2 2017 (surveyed April
2017) 95 36
59
Q1 2017 (surveyed February 2017)
100 40 60
Q4 2016 (surveyed November 2016) 80
24 56
Q3 2016
(surveyed July 2016) 68
29 39
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 605 small business owners,
with annual revenues up to $20 million, in all 50 United States
conducted July 10-14, 2017. 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,
insurance, investments, mortgage, and consumer and commercial
finance through more than 8,500 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 271,000 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 (2002-2015 CRA government data). To
help more small businesses achieve financial success, in 2014 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170802005348/en/
Alice Hartnett,
704-715-9115alice.hartnett@wellsfargo.com@AHartnettWForSarah
DuBois, 612-466-7484sarah.dubois@wellsfargo.com@SDuboisWF
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