Optimism among small business owners has made big leaps in regard to strong revenues and cash flow in the latest quarterly Wells Fargo/Gallup Small Business Index survey.
For the fourth quarter of 2018, small business optimism had an overall index score of 129. The score is 11 points higher than last quarter’s score of 118 and up 26 points from Q4 2017’s score of 103. It is also the highest in the survey’s 15-year history, it said.
Survey respondents said their company doing well financially drove optimism, with 80 percent rating their financing situation as ‘very good’ or ‘somewhat good,’ up 9 percentage points from the same time last year.
More than half (55 percent) of business owners said their company’s revenue increased, up from the same period last year at 46 percent, with 62 percent estimating revenue increases in the next year.
In addition, 74 percent of respondents said they had good cash flow over the past year, up from last year’s 65 percent, and 78 percent said they expect their business to have good cash flow in the upcoming year, also up from last year’s 73 percent.
“As we head into the end of 2018, small businesses are continuing to indicate that they are thriving and hopeful for the future,” Andy Rowe, Wells Fargo head of customer segments, said. “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.”
The survey also focused on the top priorities business owners see for the new Congress.
When asked to list them, 29 percent said taxes were the top issue; 12 percent said health care; and 11 percent said government regulation.
In terms of congressional actions, 74 percent said tax codes and regulations were the most important to their business; 61 percent said small business regulation; and 60 percent said health care.
“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,” Mark Vitner, Wells Fargo managing director and senior economist, said. “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.”
When asked to predict the operating environment of their business in 2019, 35 percent said it would be better (down 10 percent from 2016); 55 percent said there’d be no change (43 percent in 2016); and 10 percent said it would get worse (11 percent in 2016).
For the third quarter in a row, respondents said hiring and retaining staff was their top challenge (18 percent). Other challenges include attracting new business (10 percent), taxes (9 percent) and government regulations (9 percent).
The survey was conducted from Nov. 8-14, immediately following the midterm elections, with a margin of error of +/- 4 percentage points.