Why Are Fewer Small Business Owners Feeling Successful?


Fewer small business owners perceive themselves as successful now than did at the start of the economic recovery, a Wells Fargo-Gallup survey of a representative sample of 601 small business owners reveals. In 2009, 43 percent of small business owners reported feeling “extremely” or “very successful as a small-business owner.” By 2014 that fraction had eroded to 37 percent.

The results are perplexing. The same survey showed that the fraction of small business owners who are “extremely” or “very satisfied” with their choice of occupation was four percentage points higher this year than it was in 2009 when the recovery began, and only one percentage point below its level in 2007.

Moreover, many measures of the economic performance of small business owners are higher now than at the beginning of the economic recovery. The National Federation of Independent Business’s October 2014 Small Business Economic Trends reports that the net percentage of small business owners reporting higher earnings over the previous three months improved by 23 percentage points between June 2009 and September 2014, while the net percentage of small business owners reporting higher sales over the prior three months improved by 30 percentage points over the same period.

The Wells Fargo/Gallup Small Business Index, a measure of small business owners’ optimism, hit 49 this August, far higher than the 10 it registered in 2009 at the beginning of the economic recovery. The same Wells Fargo Gallup survey that indicated the decline in small business owners’ perception of success also revealed an optimism score of 47 in the second quarter.

The Wells Fargo/Gallup index measure of business owners’ current situation registered 18 in the most recent survey and 14 in the second quarter, both up from -11 in the second quarter of 2009. Future expectations were at 31 in the third quarter of 2014 and 33 in the second quarter, also both higher than the 10 they registered in the second quarter of 2009.

The fraction of small business owners reporting that their financial situation is good or very good was 7 percentage points higher in the last survey, and 2 percentage points higher in the second quarter 2014 survey, than it was at the beginning of the economic recovery. Moreover, 43 percent of owners said their revenue had increased in the previous year when asked in the third quarter of 2014 (and 36 percent in the second quarter), both up from 24 percent at the start of the recovery. The fraction indicating good or very good cash flow over the previous four quarters was up 11 percentage points in the current quarter (and 6 percentage points in the second quarter) over where it was in mid-2009.

With small business owners’ cash flow, sales, and earnings all up since the beginning of the economic recovery, and with their optimism and satisfaction in business ownership all higher than in the second quarter of 2009, small business owners should perceive themselves as being more successful now than they did at the start of the economic recovery. That they don’t leaves me wondering what’s making them feel down about their performance.

Any thoughts?

8 Comments ▼

Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

8 Reactions

  1. I think the recession has caused a general air of pessimism about the economy in general and I think that manifests in this poll where the SMB owners are probably doing as well as they were previously, but have a worse attitude about it.

  2. Well under every scenario business plan needs to be intact. irrespective of how big or small the business would be. That is why, it is important to review the business plans basis on market condition, as these tactics helps in making a business do good profit under every situation.

  3. This is an interesting dichotomy. In addition to the general pessimism that Robert alludes to above, a lot of it may have to do with the fact that many have been forced into entrepreneur roles that they weren’t properly trained for, due to economic conditions. Many of today’s small business owners didn’t necessarily plan on branching off on their own, so they may be in over their heads in many ways.

    [Edited by Editor]

  4. While I think that Eric has an interesting point I also believe that America was built on independent businesses and that, when the jobs dry up, one obvious solution is to strike out on your own. This is especially true of those who have run out of unemployment or are just too old to find a job in the current competitive marketplace. Granted neither of those scenarios are the best time to start a business but resourceful people will make it work even if it is just a pert time, supplemental thing.

  5. Martin Lindeskog

    How does these indications compare to the latest Purchaser Managers’ Index?

Leave a Reply

Your email address will not be published. Required fields are marked *

*



Free e-Book: 8 Insights You Need to Know Before Choosing HR Software for Your Small Business




Learn how to navigate the HR software market, avoid getting oversold on unnecessary features and choose the right tools for your small business's unique needs.






No, Thank You