Consumer Comeback Blog

Small Business Owners Have Dim Outlook for Coming Year

Since the recession, many businesses have been in a wait-and-see holding pattern. Small businesses often have the most reason to be cautious, and that hesitance is evident in the latest Wells Fargo/Gallup Small Business Index.

The quarterly survey of 600 small businesses, conducted July 9-13, showed a decline in optimism among small business owners. Currently resting at 17, the Index is down from a four-year high in April, but has improved since July 2010, when the Index sank to -28.

Optimism is also lagging in small-business owners’ ratings of their businesses’ expectations for the next 12 months. These expectations have hit the lowest point of the year, getting progressively worse in the following areas:

  • The percentage of owners expecting their financial situation to be very or somewhat good over the next 12 months fell to 59% in July from 66% in April.
  • The percentage of owners expecting their revenues to increase fell to 43% in July from 49% in April.
  • The percentage of owners expecting their company cash flows over the next year to be poor increased to 23% in July from 18% in April.

“Small-business-owner optimism is essential to U.S. economic growth and job creation,” Gallup reported. “But it is hard to see how owners can become significantly more optimistic until jobs conditions improve substantially, consumers begin to exhibit sustained, increased economic confidence, and consumer spending increases.”