Wells Fargo Small Business Index: Business Owners Express Slightly More Optimism in April, Say Attracting Customers Single Biggest Challenge Today
SAN FRANCISCO--(BUSINESS WIRE)-- Despite concerns about a slowing U.S. economy, small business owners are a little more optimistic in April than at the start of the year, according to the latest Wells Fargo/Gallup Small Business Index conducted April 1-5. In the survey, more business owners said attracting customers and new business is the most important challenge they face today.
The Wells Fargo/Gallup Small Business Index, a quarterly survey of U.S. small business owners, improved 7 points to positive 16 (+16) in April from positive 9 (+9) in January and negative 11 (-11) in November. While the Index is down from a year ago (April 2012), when it stood at positive 23 (+23), it's the third highest reading since July 2008.
One key driver of the modest improvement from the first quarter survey is company cash flow, with 48 percent of business owners saying their cash flow was very good or somewhat good over the past 12 months, up significantly from 41 percent in January. This is the best cash flow reading since the first quarter of 2009. Fifty-three percent of owners expect their cash flow to be very or somewhat good over the next 12 months.
When asked to describe the most important challenge facing them today, 21 percent of small business owners said attracting customers and new business, making it the top concern. Government regulations was the second most frequent mention at 10 percent, followed by the weak economy at 9 percent, taxes at 9 percent, and healthcare at 8 percent. Four percent of business owners said credit availability was their biggest challenge.
"While we are seeing measured signs of recovery and businesses in general continue to improve their balance sheets, small business owners are still uncertain about the future," said Marc Bernstein, Wells Fargo head of Small Business. "Small business owners, who now have stronger cash flow than at any time since the start of the Great Recession, tell us they're focused on generating more steady sales, and many are holding off making investments in their business until that happens."
Small Business Credit
More business owners said they are comfortable with their debt load today (61 percent) than are uncomfortable (37 percent). The number of business owners surveyed who said they have never used credit for their business has increased from a year ago. In the April survey, 32 percent of business owners said they have never borrowed money or used credit for their business, up from 24 percent a year ago.
Small Business Index Key Drivers
Wells Fargo, together with Gallup, surveys small business owners quarterly across the nation 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.
Index Scores: Q1 2012 - Q2 2013
Overall Index Score
(surveyed Apr 2013)
(surveyed Jan 2013)
(surveyed Nov 2012)
(surveyed July 2012)
(surveyed April 2012)
(surveyed Jan 2012)
For more information on the survey, and to download complete results, visit the Small Business Index section of Wells Fargo's Business Insight Resource Center. The site features a video of Wells Fargo Senior Economist Mark Vitner, who provides comments on the second-quarter Index results.
About the 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 603 small business owners in all 50 United States conducted April 1-5, 2013. 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.
About Wells Fargo
Wells Fargo & Company (NYS: WFC) is a nationwide, diversified, community-based financial services company with $1.4 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 9,000 stores, 12,000 ATMs, and the Internet (wellsfargo.com), and has offices in more than 35 countries to support the bank's customers who conduct business in the global economy. With more than 270,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 26 on Fortune's 2012 rankings of America's largest corporations. Wells Fargo's vision is to satisfy all our customers' financial needs and help them succeed financially.
Wells Fargo loans more money to America's small businesses than any other bank (2002-2011 Community Reinvestment Act government data) and is a leading lender to women- and diverse-owned businesses. With the nation's largest network of retail banking stores, and an award-winning online library of videos, articles and webcasts known as the Business Insight Series (www.wellsfargobusinessinsights.com), Wells Fargo provides business owners with timely advice and information to educate and help them succeed financially. For more information, or to speak with a Wells Fargo banker, visit wellsfargo.com/biz or call the National Business Banking Center at 1-800-CALL-WELLS.
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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