Q4 survey marks record-high score in survey’s 15-year history
Small business owners want incoming Congress to address taxes and regulation
SAN FRANCISCO--(BUSINESS WIRE)--Optimism among small business owners jumped significantly in the latest
quarterly Wells
Fargo/Gallup Small Business Index, with an overall Index score of
129. That is 11 points higher than last quarter’s score of 118 and the
highest in the survey’s 15-year history. The fourth quarter 2018 survey
was conducted Nov. 8–14, immediately following the midterm elections.
Survey respondents said positive business financials drove the record
high. Eighty percent of respondents rated their financial situation as
very good or somewhat good, and 84 percent said they expect their
financial situation to be very good or somewhat good over the next year.
A record 55 percent of business owners reported increases in revenue,
with 62 percent estimating revenue increases in the next year. In
addition, 74 percent said they had good cash flow in the past 12 months,
and 78 percent said they expect their businesses to have good cash flow
over the next year.
“As we head into the end of 2018, small businesses are continuing to
indicate that they are thriving and hopeful for the future,” said Andy
Rowe, Wells Fargo head of Customer Segments. “With owner optimism
hitting its highest level in the 15 years Wells Fargo has been
conducting this survey, we are excited to see what this will mean for
their continued capital investment and growth.”
Post-election priorities
The survey also looked at what priorities business owners see as
paramount for the incoming U.S. Congress, including several questions
asked in the fourth quarter of 2016 following the last national election.
When asked to forecast their operating environment in the coming year,
35 percent said it will be better (down 10 percent from 2016) and 55
percent forecasted no change (43 percent in 2016); 10 percent said it
would get worse (11 percent in 2016). In addition, about half of
respondents said the actions Congress will take next year will have no
impact on their businesses, compared to about one quarter of respondents
in 2016 who were asked a similar question regarding the new President
and Congress.
In April 2018, the Small
Business Index survey included a question about owners’ views of the
recent tax reform, and 39 percent said they didn’t know how the tax bill
would affect their businesses; 27 percent did not expect it to benefit
them. Seven months later, taxes continue to be key issue among small
business owners. When asked to list the most important issue they would
like to see addressed by the new Congress, 29 percent highlighted taxes
as the top issue, with 12 percent listing healthcare and 11 percent
saying government regulation. When asked what congressional actions will
be most important for their businesses, 74 percent said actions relating
to tax codes and regulations, while 61 percent said overall small
business regulation and 60 percent said actions related to healthcare.
“With the increases we’ve seen in business owners’ revenues and the high
degree of confidence business owners have in their cash flow, it’s not
surprising that taxes remain a key issue for them,” said Mark Vitner,
Wells Fargo managing director and senior economist. “While the number of
business owners that don’t expect changes to their operating environment
remains high, most see the current environment as very good and many
business owners are looking to expand their business in 2019.”
Top challenges continue to be hiring and attracting new business
For the third consecutive quarter, survey respondents said hiring and
retaining staff was their top challenge, at 18 percent. In addition, the
number of business owners who expect to have an increased number of
openings in the next 12 months remained steady at 35 percent.
Other challenges cited include attracting new business (10 percent) and
taxes (9 percent), both of which have continued to be top issues for
small business owners.
Ease of access to credit increases for the second straight quarter
The percentage of small business owners who said obtaining credit was
somewhat or very easy in the past 12 months rose to 47 percent, compared
with 40 percent last quarter. Half of business owners surveyed said they
expect credit will be easy to obtain over the next year. Further
underlining owner optimism around the ability to access this credit,
only 1 percent of respondents said access to credit was the most
important challenge they face.
Wells Fargo/Gallup Small Business Index Scores: Q4 2017 – Q4 2018
|
|
|
Overall Index
Score
|
|
|
Present
Situation
|
|
|
Future
Expectations
|
Q4 2018 (surveyed November 2018)
|
|
|
129
|
|
|
59
|
|
|
70
|
Q3 2018 (surveyed July 2018)
|
|
|
118
|
|
|
52
|
|
|
66
|
Q2 2018 (surveyed April 2018)
|
|
|
106
|
|
|
45
|
|
|
61
|
Q1 2018 (surveyed January 2018)
|
|
|
107
|
|
|
42
|
|
|
65
|
Q4 2017 (surveyed October 2017)
|
|
|
103
|
|
|
43
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
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 601 small business owners, with annual revenues up to
$20 million, in all 50 United States conducted November 8-14, 2018. 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 +129 in the fourth quarter of 2018, 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. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, investment and mortgage products and
services, as well as consumer and commercial finance, through 7,950
locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile
banking, and has offices in 37 countries and territories to support
customers who conduct business in the global economy. With approximately
262,000 team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2018
rankings of America’s largest corporations. News, insights and
perspectives from Wells Fargo are also available at 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 (loans under $1 million, 2002-2016 Community
Reinvestment Act government data). To help more small businesses achieve
financial success, Wells Fargo introduced Wells
Fargo Works for Small Business
®
– a broad
initiative to deliver resources, guidance and services for business
owners. 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.