Small Business Optimism Continues To Edge Higher

by | April 18, 2011

Our guest blog post comes from Royal Raidle, Senior Business Relationship Manager at Wells Fargo and a participant in our upcoming banking panel at our April 27 Equinox Focus Event. 

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Small business owners continue to show growing confidence in the economic recovery.  That’s according to the most recent Wells Fargo/Gallup Small Business Index survey conducted in mid-January.  I am also seeing similar trends with my business customers.  I find that business owners are more confident about the market and feel that the hard work put into keeping their cash flows positive will pay off in greater opportunities due to less competition.

Wells Fargo’s senior economist Dr. Scott Anderson says that small businesses are feeling much better about this economic recovery than they did two quarters ago.

“These gains in optimism exceed the improvement we saw between August 2003 and March 2004, when the last economic recovery gathered some momentum and stronger job growth ensued,” Anderson said.  “It appears the change is driven by healthy gains in demand from consumers and businesses, which are leading to improvements in small businesses revenues and cash flows.”

The Index is the sum of “present situation” and “future expectations” of business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability.   Looking forward, business owners expect improvements in their financial situation, revenues, jobs and access to credit over the next 12 months.  Of these measures, they are most optimistic about increased revenues, with 54 percent expecting an increase of a lot or a little, up from 44 percent in Q4 2010.

The increased optimism is encouraging and as I work with business owners I find that many business owners remain cautiously optimistic — they’re keeping their doors open and looking for new business opportunities.