Small Business Optimism Continues to Rise

Small-Business Optimism Continues to RiseThe latest Wells Fargo/Gallup Small Business Index survey, conducted in April and released May 11, shows small-business owners’ optimism is on the rise-slowly but steadily.

Small-business owners in the survey had more favorable perceptions of their businesses’ current financial situation and cash flow than in the prior survey, conducted in January 2010. The overall optimism score was negative 11 (-11), which is a 5-point increase from January and a 10-point improvement from the survey’s all-time low of -21 in July 2009.

“As consumer and business spending appeared to pick up pace, this bolstered small-business owners’ optimism around their current situation,” says Dr. Scott Anderson, senior economist at Wells Fargo. “In our latest survey, we see more small-business owners describing their cash flows and current financial situation as good and higher percentages seeing an increase in revenues over the last 12 months.”

Overall, the survey has shown a slow but steady upward trend in the past three quarters.  However, says Anderson, “Business owners remain skeptical about the sustainability of this current upturn.”

The survey measures small businesses’ assessment of their current situation, as well as their expectations for how their business will perform over the next 12 months, on six key measures: financial situation, cash flow, revenues, capital allocation spending, hiring and availability of credit. A score of zero would show entrepreneurs are neutral-neither optimistic nor pessimistic-about their companies’ current financial situation and future outlook.

Respondents’ “present situation” improved seven points from negative 29 (-29) in January 2010 to negative 22 (-22). “Future expectations” declined slightly from 13 to 11.

Fifty-four percent described their company’s current financial situation as somewhat or very good-a big improvement from 48 percent in January 2010. Forty-two percent rated their cash flow in the past 12 months as somewhat or very good-an increase from 39 percent in January 2010.

The survey, which has been conducted for the past 28 quarters, measures responses of approximately 600 small-business owners nationwide.

Whenever I talk to audiences of small-business owners, I ask them how they’re feeling about the future. Until recently, despite the growing number of statistics and surveys showing the economy is on the mend, their responses have been uniformly pessimistic. In the past few weeks, however, I’ve started to hear from some entrepreneurs who are feeling positive about their prospects. How are you feeling about the economy?

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Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

9 Reactions
  1. Rieva,

    Thanks for this post. I think we all need a little good news…

    The Franchise King

  2. Everything in this economy seems to be moving slowly, but at least this is movement in the right direction. Also, congratulations to SMB owners for being so optimistic.

  3. This is good news indeed. I think that the current recession that brought about the loss of jobs to many created plenty of aspiring entrepreneurs with fresh ideas that work. Certainly, we’ll see more of these techie-preneurs rise up the competition.

  4. I was glad to come across this article and see that optimism is continuing to rise among small business owners. If you’re not optimistic right now, hang in there, because help and support is available. If you have not already done so, you might want to take a look at the Microsoft SMB site. No registration is required and you can have access to informative videos as well as other SMB owners who have found ways to increase sales and are actually thriving.

    Microsoft Small Business Center/Learning Center/Marketing:

    Best of luck to all!

    The Microsoft SMB Outreach Team

  5. small biz opportunity

    As the recession hits the big corporation, or classical biz model, I really feel that small biz have the opportunities to take great advantage of the situation. More flexible, faster to implement ideas, entrepreneurs and small biz have way to reach great results form the current situation. Is it perhaps because small business owner find efficient way to make biz or to promote their biz more efficiently? The interesting results are show here in these statistics.
    When corporate world are unable to pull our economy to the top, small biz owner find way to create their own wealth and that is awsome.

  6. We sell privately held businesses, and we talk to many small business owners daily … they are saying their businesses are doing well (having trimmed some employees back re: the down turn), but its just that the banks are not lending to SBO’s currently, which slows down their growth and keeps them from expanding or hiring workers.

    Overall, businesses that were profitable before the downturn are doing fine, marginal business are doing fine, and even businesses that are struggling are getting buy with focus on their expenses.

  7. I think it is hard to remain positive in the face of global concerns over oil prices and trouble in the middle-east. I am hopeful, but not optimistic for my business in the short-term.