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.