Wells Fargo Survey: Small Business Optimism Hits Record High Amid Strong Economy
SAN FRANCISCO--(BUSINESS WIRE)--Aug 7, 2018--Small business optimism is at an all-time high in the latest quarterly Wells Fargo/Gallup Small Business Index, conducted July 11-18, 2018.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20180807005028/en/
The survey, which measures small business optimism, had an overall Index score of 118, 12 percentage points higher than last quarter and the highest level in the survey’s 15-year history. The current Index score was driven by high indicators from small business owners on their overall financial situation, cash flow and ability to obtain credit. The news comes as the U.S. economy grew 4.1 percent in the second quarter, according to the U.S. Department of Commerce, outperforming an average growth rate of 2.3 percent from the fourth quarter of 2012 to the first quarter of 2018.
“Small business owners continue to feel confident about their business’ current and future financial situation as the economy continues to show positive growth,” said Andy Rowe, Wells Fargo head of Customer Segments. “We are hopeful the unprecedented optimism among business owners will translate into an increase in business investments, and more Main Street small business growth.”
Positive financial outlook
Confidence in the economy was reflected in small business owner attitudes about their current and future financial situation. In the July Wells Fargo/Gallup Small Business Index, 78 percent of small business owners reported their financial situation today is very or somewhat good, and 84 percent of business owners said they expect their financial situation will be very or somewhat good a year from now.
In addition, both current and projected future cash flow were key drivers of small business optimism, with 69 percent classifying their cash flow over the past 12 months as very or somewhat or good, an increase of 6 percentage points from the previous quarter and the highest reading in the history of the survey. Over the next year, 77 percent expect their cash flow to be very or somewhat good.
Small business owners also reported on their ability to obtain credit when they need it, with 49 percent saying they expect it will be very or somewhat easy to obtain credit over the next 12 months. That’s up five percentage points over last quarter and the highest reading on this measure since 2007.
Even as optimism soared, small business owners’ sentiment about their company revenues remained relatively consistent with the previous quarter. About half of respondents said their revenues increased over the last 12 months, and 61 percent said they expect company revenues will increase over the next 12 months.
Challenges in hiring and retaining staff remain
For the second consecutive quarter, survey respondents said hiring and retaining staff was their top challenge, at 18 percent. It could remain a challenge in the year ahead, as 35 percent of firms said they expect an increase in the number of jobs at their company in the next year. Other top challenges cited by business owners include taxes (9 percent) and attracting new business (9 percent), which have been consistently reported among the top issues of small business owners.
Companies see limited competition from online retailers
The vast majority of small business owners (80 percent) noted that their business did not currently compete with large e-commerce companies and retailers. Additionally, about two-thirds of business owners said the shift from brick-and-mortar stores to online retailers does not impact their business.
Some small business owners, however, are continuing to increase their digital presence to compete in an increasingly digital marketplace. While only one quarter of business owners said they currently conduct 25 percent or more of their business online, the number of respondents who expect to conduct at least this much business online in the next five years was 37 percent. Additionally, 54 percent of respondents said they are at least somewhat likely to increase their online and social media marketing efforts over the next 12 months.
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 604 small business owners, with annual revenues up to $20 million, in all 50 United States conducted July 11-18, 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 +118 in the third quarter of 2018, 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 8,050 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 38 countries and territories to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2018 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 – 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.
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.
View source version on businesswire.com:https://www.businesswire.com/news/home/20180807005028/en/
CONTACT: Media Contact
Manuel Venegas, 213-253-6531
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: OTHER CONSUMER SMALL BUSINESS PROFESSIONAL SERVICES BANKING FINANCE CONSUMER
SOURCE: Wells Fargo & Company
Copyright Business Wire 2018.
PUB: 08/07/2018 08:00 AM/DISC: 08/07/2018 08:01 AM