August 9 — Confidence in the economy is reflected in small business 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 5 percentage points over last quarter and the highest reading on this measure since 2007.
Challenges Hiring and Retaining Staff Continue
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.
Competition from Online Retailers Limited
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 5 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.
“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.”