Optimism Among Small-Business Owners Highest in Eight Years

Small-business owners’ optimism improved to its highest level in eight years after the 2016 presidential election. The latest Wells Fargo/Gallup Small Business Index, which measures the optimism of small-business owners, increased to +80 in mid-November from +68 in July. The November index represents the highest optimism reading since January 2008, when the index was at +83.

Increases in small-business owners’ optimism about the future, rather than their opinions of their present situations, are largely behind the increases in the overall index. Many of their assessments of their present expectations are down a little, while future expectations rose on all six components of the index.

  • The percentage of small-business owners expecting company revenues to increase over the next 12 months rose from 48% to 58%.

  • Similarly, cash flow expectations are up slightly, from 65% to 70%.

  • Owners’ view of future capital spending is also higher, with 35% in the current survey expecting to increase spending compared with 25% in the third quarter.

  • Expectations about adding jobs rose from 21% in the third quarter to 36% in the fourth.

  • Ease of obtaining credit is also up — from 37% in the third quarter to 44% in the latest survey.

Small-Business Owners’ Operating Environment Going Into 2017

Aside from the index, the latest survey finds small-business owners feeling relatively upbeat about both their businesses’ operating environment in 2017 and their businesses’ future.

  • Specifically, 45% of small-business owners, up from 31% in the fourth quarter of 2014 and the highest in four end-of-year measurements since 2011, expect their operating environment to be better in the next year compared with the current year.

  • Similarly, when asked if they expect their business to be better or worse off in 2017 compared with 2016, 46% of small-business owners — up from 30% two years ago — are optimistic.

Less than 20% of small-business owners are pessimistic in their business outlook on either question.

Small-Business Owners’ Views of Operating Environment

All in all, do you think the operating environment for your business in [following year] will be better, worse or about the same as [current year]?

 

Better

About the same

Worse

Don’t know/Refused

 

%

%

%

%

Quarter 4, 2016

45

43

11

1

Quarter 4, 2014

31

53

15

1

Quarter 4, 2013

23

51

25

1

Quarter 4, 2011

17

55

27

1

Wells Fargo/Gallup Small Business Index

Small-Business Owners’ Views of Future

All in all, are you more optimistic about your business’s future going into [next year] than you were going into 2016, less optimistic or about the same?

 

More optimistic

About the same

Less optimistic

Don’t know/Refused

 

%

%

%

%

Quarter 4, 2016

46

37

17

*

Quarter 4, 2014

30

54

16

*

Quarter 4, 2013

23

49

28

0

Quarter 4, 2011

21

47

32

*

* Less than 0.5%

Wells Fargo/Gallup Small Business Index

Small-Business Owners Upbeat About New President and Congress

Overall, small-business owners are significantly more positive than negative about the prospect of the newly elected president and Congress. One-half (51%) of small-business owners think the actions of the new president and Congress will make their company better off, while 17% expect to be worse off and 26% feel the upcoming actions in Washington will have no impact on their business. Similarly, 61% of small-business owners believe the new president will focus on issues important to them as owners, while one-third predict he will not.

Small-Business Owners’ Views of the Effect of the New President and Congress on Their Business

And, do you think the actions the new president and Congress will take next year will make your company better off, worse off or don’t you think their actions will have any effect on your business?

 

Better off

Worse off

No effect

Don’t know/Refused

 

%

%

%

%

Quarter 4, 2016

51

17

26

6

Wells Fargo/Gallup Small Business Index

Small-Business Owners’ Views of the New President’s Focus on Issues Important to Them

As far as you are concerned, do you think the new president will focus on the issues important to you as a small business owner, or not, when he takes office in January?

 

Yes, will

No, will not

Don’t know/Refused

 

%

%

%

Quarter 4, 2016

61

33

6

Wells Fargo/Gallup Small Business Index

As part of the poll, small-business owners were asked to identify which issues they would most like the new president and Congress to focus on when they take office in January. The most frequently mentioned issues are taxes, healthcare and government regulations.

The importance of tax relief for small-business owners is also apparent in the responses to a question that asked owners to rate the importance of a list of issues the new president and Congress could tackle. More than eight in 10 small-business owners reported that actions relating to changes in the tax code will be extremely or very important. Seventy-six percent of small-business owners also saw actions relating to healthcare and the current healthcare law as extremely or very important.

Asked about the effectiveness of a number of ways the new administration can help small businesses grow, nine out of 10 small-business owners say that improving the overall economy would be extremely or very effective. Other highly rated potential actions that could be taken by the administration include reducing taxes on small-business owners (81% extremely or very effective) and simplifying the tax code (78% extremely or very effective).

Bottom Line

Small-business owners have become substantially more positive after the November election, returning to a level of optimism not seen since early 2008, although still not at the levels of optimism recorded in 2007 and earlier. The majority of owners believe the new president and Congress will focus on issues of importance to small businesses. Owners are particularly interested in having the nation’s leaders address taxes, healthcare and regulations.

From http://www.gallup.com/poll/199232/optimism-among-small-business-owners-highest-eight-years.aspx?utm_source=alert&utm_medium=email&utm_content=morelink&utm_campaign=syndication

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