Small business owners in the U.S. are less optimistic than they were at the beginning of 2015, according to the latest Wells Fargo/Gallup Small Business Index.
In the quarterly small business survey, which measures small business owner optimism, the overall Index score dipped from 59 in August to 54 in November, representing the lowest score since July 2014. It’s also the third quarter in a row that the score has dropped after starting the year at 71. A major contributor to this year’s decline is a drop in the number of business owners reporting increases in company revenue. This quarter’s score also was driven by a combination of incremental declines in business owner perceptions of their financial situation, capital spending and hiring.
“This has been an unusually slow economic recovery for everyone, and small business owners are certainly feeling that,” said Mark Vitner, Managing Director and Senior Economist for Wells Fargo Securities. “With the economy growing as slowly as it has been, it’s been difficult for many business owners to increase their sales, and this has been particularly burdensome for firms who have seen expenses rise, including healthcare costs. As a result, many have been reluctant to invest in equipment, expand their operations and hire staff, even as business owners in general have seen gradual improvement in their financial situation and cash flow over the last few years.”
When asked to identify the most important challenge they face, business owners cited several concerns. Business owners said their biggest concern was government regulations (13 percent) – the highest percentage since the question was first asked in the second quarter of 2013. This challenge was followed by attracting customers and finding new business (11 percent), and hiring and retaining quality staff (10 percent). These three challenges have been consistently reported as the top concerns of small business owners since early 2013.
The Index consists of owners’ ratings of the current situation of their businesses and owners’ ratings of how they expect their businesses to perform over the next 12 months. Results are based on telephone interviews with 606 small business owners, with annual revenues up to $20 million, in all the U.S. Read the full results of the survey here.
