- Small business owners forecast a
promising 2017; anticipate improved revenues, cash flow and ease of
obtaining credit
- Business owners report on their
priorities for the President-elect and Congress citing the tax
code, healthcare and government regulations as top issues
Small business owners are the most optimistic they have been
since January 2008, according to the latest Wells Fargo/Gallup
Small Business Index, conducted Nov. 11-17.
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Small business optimism at highest point
in eight years (Graphic: Wells Fargo & Company)
In the quarterly small business survey, which measures the
optimism of small business owners, the overall Index score
increased significantly to 80 in November, up 12 points from July
and up 26 points from a year ago. This represents the highest
optimism reading since January 2008 when the Index score was 83,
and the largest quarterly increase in a year. A major driver behind
the increased optimism is how business owners are feeling about the
year ahead. Forty-five percent say they expect the operating
environment for their business will be better in 2017. The increase
in small business optimism was largely driven by business owners’
expectations that their finances will improve in 2017.
Key drivers of this quarter’s Index score included:
- Revenue – More than half (58
percent) expect their business’s revenue to increase a little or a
lot in the next 12 months, up from 48 percent in July.
- Stronger cash flow – Seventy
percent believe their cash flow will be somewhat or very good in
the next 12 months, up from 65 percent in July.
- Capital spending – Thirty-five
percent say they plan to increase their capital spending a lot or a
little, up from 25 percent in July.
- Hiring – Thirty-six percent
expect the number of jobs at their company to increase a little or
a lot over the next 12 months, up from 21 percent in July. This is
the highest reading in the 13-year history of the survey.
“The latest overall Index score tells us that business owners
are feeling positive about the future and have a renewed sense of
confidence as they look to the year ahead,” said Mark Vitner,
Managing Director and Senior Economist for Wells Fargo Securities.
“Not only do small business owners report that the operating
environment for their businesses will be better in 2017 than it was
in 2016, but business owners are anticipating growth for their
businesses in the new year as more plan to increase their capital
spending, add staff and apply for credit.”
Small Business Owners and Credit
In the November survey, almost half (44 percent) of small
business owners surveyed said they expect credit will be somewhat
or very easy to obtain in the next 12 months, up from 37 percent in
July. This represents the highest reading on this measure since
January 2008 when 48 percent of small business owners said credit
would be somewhat or very easy to obtain over the next 12 months.
When asked if they were planning to apply for any new credit
products for their business in the next year, 14 percent of small
business owners said they were, up slightly from 11 percent in
July.
Small Businesses and Post-election Priorities
In the November survey, small business owners were asked about
their priorities for the incoming president and Congress. When
asked what issues the new president and Congress should focus on,
81 percent of small business owners said actions relating to
changes in the tax code, tax regulations, and tax rates for small
businesses were most important. Other top issues include actions
relating to healthcare and the current healthcare law (76 percent),
and overall action on government regulations impacting small
business owners (70 percent) and actions that could impact oil
prices or energy costs (59 percent).
A little more than half (51 percent) think that actions taken by
the new president and Congress next year will make their businesses
better off, 17 percent think their businesses will be worse off and
26 percent think the actions will have no effect.
Small business owners also were asked what the new
administration could do to help small businesses grow in the years
ahead. Ninety percent say improving the economy overall, 81 percent
say reducing taxes on small businesses, and 78 percent say
simplifying the tax code as it applies to small businesses would be
very or extremely effective. Sixty-one percent say they think the
new president will focus on the issues important to them as a small
business owner.
Small Business Challenges
When business owners were asked to identify the most important
challenges facing their business today, attracting customers and
finding new business (11 percent) and government regulations (11
percent) were cited as the top concerns. Hiring and retaining
quality staff was the second most frequent mention at 10 percent,
followed by the economy (8 percent), and healthcare costs (8
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.
Small Business Index Key Drivers
Wells Fargo and Gallup survey small business owners across the
nation each quarter to gauge their perceptions of their present
situation (past 12 months) and future expectations (next 12 months)
in six key areas: financial situation, cash flow, revenues, capital
spending allocation, hiring, and credit availability. The present
situation score dipped slightly to 24 in November, down from 29 in
July, while the future expectations score rose 17 points to 56.
Wells Fargo/Gallup Small Business Index
Scores: Q4 2015– Q4 2016
Overall IndexScore
PresentSituation
FutureExpectations
Q4 2016 (surveyed November 2016) 80 24
56
Q3 2016 (surveyed July 2016) 68 29
39
Q2 2016 (surveyed April 2016) 64 24
40
Q1 2016 (surveyed January 2016) 67 26
41
Q4 2015 (surveyed November 2015) 54
21 33
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 602 small business owners,
with annual revenues up to $20 million, in all 50 United States
conducted November 11-17, 2016. 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. Founded in 1852 and headquartered in San Francisco, Wells
Fargo provides banking, insurance, investments, mortgage, and
consumer and commercial finance through more than 8,600 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
269,000 team members, Wells Fargo serves one in three households in
the United States. Wells Fargo & Company was ranked No. 27 on
Fortune’s 2016 rankings of America’s largest corporations. Wells
Fargo’s vision is to satisfy our customers’ financial needs and
help them succeed financially. 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/20161208006037/en/
Wells Fargo & CompanyAlice Hartnett,
704-715-9115alice.hartnett@wellsfargo.com@AHartnettWForSarah
DuBois, 612-466-7484sarah.dubois@wellsfargo.com@SDuboisWF
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