- A majority of small business owners are following the election very closely, compared to less than half of the general public
- Business owners report improved cash flow and access to credit; share views on payment trends including a strong preference for check or cash
SAN FRANCISCO--(BUSINESS WIRE)--Small business optimism improved slightly in the latest Wells
Fargo/Gallup Small Business Index, conducted July 6-12, yet overall it
has remained relatively stable throughout 2016.
In the quarterly survey,
which measures the optimism of small business owners, the overall Index
score increased slightly to 68 in July from 64 in April. This represents
the highest optimism reading since January 2015 following several
quarters of incremental shifts. Small business owners also reported an
increase in the ease of obtaining credit, with 36 percent saying that it
was somewhat or very easy for their company to obtain credit over the
past 12 months – the highest reading on this measure since the fourth
quarter of 2008. While other measures saw minor incremental shifts,
small business owners’ rating of their company’s cash flow over the past
12 months improved in July as 60 percent rated their company cash flow
as very or somewhat good, compared to 55 percent last quarter. This
measure has stayed reasonably consistent, hovering within an eight-point
range since the first quarter of 2014 when it jumped from 46 to 52.
“The latest Small Business Index score shows that while small business
owners are more optimistic today than a year ago, many remain uncertain
and cautious about what lies ahead,” said Lisa Stevens, Wells Fargo’s
head of Small Business. “After several years of slow, gradual
improvement in business owner perceptions of cash flow, revenue and
financial situation, this trend seems to have plateaued. In this
election year, business owners are reporting little change in most
metrics, including their hiring and capital spending plans.”
Small
business owners and the 2016 presidential campaign
In the July survey, small business owners were asked follow-up questions
to the April survey about the 2016 presidential election campaign. When
asked how well they understand the candidates’ positions on issues that
would affect small businesses, 54 percent said extremely or very well,
up slightly from 47 percent in the April survey. When it comes to the
issues being discussed, 33 percent say they feel the candidates are
discussing the issues most important to them as a small business owner,
compared to 28 percent in April.
A majority of small business owners (57 percent) report following the
election very closely. This a much higher percentage than the average
American, according to a national survey of adults conducted by Gallup
in mid-June, which found that only 40 percent of Americans were
following the election very closely. Ninety-two percent of small
business owners plan to vote in the November election, matching the
responses found in April.
Small business payment trends
Small business owners also were asked about the types of payments their
businesses accept, with check and cash being the top methods (90 and 72
percent, respectively.) Other top payment methods accepted include:
-
Mailed payment via printed check from a bill-pay service (53 percent)
-
Credit or debit card at point of sale terminal (42 percent)
-
Digitally, via Electronic Funds Transfer (42 percent)
-
Credit or debit card via a mobile point-of-sale terminal, such as
Square Reader or PayPal Here (30 percent)
Similarly, when it comes to paying bills for their business, most small
business owners pay by check, either in person or by mail (91 percent),
by credit or debit card at a point of sale terminal (69 percent) or
digitally via Electronic Funds Transfer (63 percent.)
In the July survey, business owners who currently use point-of-sale
credit card systems also were asked about their acceptance of EMV
chip-enabled cards. The survey found that a majority of these business
owners (51 percent) now report that their systems are EMV chip-enabled,
compared to 31 percent when the question was first asked a year ago and
48 percent when it was asked in January 2016.
Small Business Challenges
When business owners were asked to identify the most important
challenges facing their business today, 14 percent cited attracting
customers and finding new business as the top concern. Government
regulations was the second most frequent mention at 12 percent, followed
by the economy (12 percent), and hiring and retaining quality staff (11
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 improved to
29 in July from 24 in April, while the future expectations score was
relatively unchanged, decreasing one point to 39.
Wells Fargo/Gallup Small Business Index Scores: Q3 2015– Q3 2016
|
|
Overall Index
Score
|
|
Present
Situation
|
|
Future
Expectations
|
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
|
Q3 2015 (surveyed July 2015)
|
|
59
|
|
23
|
|
36
|
|
|
|
|
|
|
|
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 603 small business owners, with annual revenues up to
$20 million, in all 50 United States conducted July 6-12, 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 36 countries and territories to
support customers who conduct business in the global economy. With
approximately 268,000 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. Wells Fargo perspectives are also available at Wells
Fargo Blogs and 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 (2002-2014 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 – and a goal to extend $100 billion in new lending to
small businesses by 2018. 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.