Small business owners today have a more positive outlook for the economy and their own success than they have at any point since late 2008. According to the Wells Fargo/Gallup Small Business Index, which is released every quarter, an increase in cash flow and the ability to hire more employees is expected in 2014. The overall score of the survey jumped from +24 last October to +45 in January.
“Small-business owners are modestly more optimistic in terms of their future expectations across most of the six key components that comprise the index, including more positive expectations about hiring in the coming year,” writes Frank Newport.
“Business customers are just starting to borrow again,” said Wells Fargo Region President of Greater Houston Glen Godkin. “It’s not near where it was prerecession, but it’s certainly going in the right direction. Small businesses feel a little bit better about the economy but still worry about government regulations and health care.”
Owners shared optimism is nearly all of the six main components of the survey. Expectations for hiring, having good cash flow, and revenue increases all showed positive growth. In addition, more said that their cash flow was “good” in the previous 12 months and fewer expressed difficulties with obtaining credit than in the previous quarter.
The survey found several different factors that contributed to the overall increase in the index’ score. “More than half (52 percent) of small-business owners said they had better cash flow in the past 12 months, and 57 percent expect to have improved cash flow in 2014. More than 20 percent of respondents said they expect to hire more workers in the next 12 months, while 48 percent said they expect revenue to grow in 2014. And fewer business owners (23 percent) said they had problems accessing credit, compared with 27 percent in October, the last time the survey was taken,” notes Mark Yost.
“The system is broken, the emerging companies are the ones having the toughest time,” explains Jim Salters, CEO of The Business Backer. “When you had community-based lending, you knew their business, you knew them, you knew their families. That has largely been lost in the massive consolidation.”
The Wells Fargo/Gallup survey was not the only recent study that found a marked improvement in small business optimism. A Newtek Business Services report also found that 62% of independent business owners have an optimistic outlook for 2014.
More than 60% of owners plan to keep the same amount of employees while 30% plan on increasing the number. Just eight percent say that they plan on downsizing during the year.
Barry Sloane, The Small Business Authority Chairman, President, and CEO said, “The world sentiment has begun to shift and optimism is starting to surface amongst business owners. We are glad to see this, as this is a precursor to small business economic growth. Without this confidence there isn’t risk taking, and without risk taking you cannot obtain growth.”
It is difficult to say how that optimism will translate to success in the upcoming year, or if there will be tangible results. Newport brings that point home as he says, “A key to improved U.S. job creation in the months to come will be whether small-business owners’ greater optimism translates into actual steps to expand their businesses — including investing more in their businesses and hiring more workers.” Hopefully, optimism and an investment in growth will go hand-in-hand.