Small-Business Optimism Falls: Wells Fargo Report
In the latest Wells Fargo/Gallup Small-Business Index, business owners (surveyed Oct. 3 to 6) generated an optimism Index score of -3, a slight change from the previous two Index readings of 0 (neither optimistic nor pessimistic). The future expectations component of the Index has been dropping since the first quarter of 2011 and now sits at 8 (down from 10 in Q3 2011), according to the report.
The future expectations component of the Index has fallen 14 points since the first quarter of 2011, when the Index peaked during the current economic recovery. The drop this quarter was primarily driven by a decline in expectations for increased revenues (37 percent, down from 42 percent in Q3) and an increase in the percentage of business owners saying it will be difficult to obtain credit in the next 12 months (43 percent, up from 37 percent in Q3).
"Small-business owners are still navigating this challenging economy," said Doug Case, Wells Fargo small-business segment manager. "In our latest survey, small-business owners said that to thrive in today's economy, they need: increased sales and demand, job creation and fewer government regulations. While we can't change the economic environment, we are working diligently to understand what our business customers need and provide them with solutions that help them move forward."
Business owners were asked about the most important problems facing their businesses today. The top three responses were complying with government regulations/taxes (22 percent), consumer confidence in the economy (15 percent) and depressed consumer spending/lack of customer demand (12 percent).
On the jobs front, only 15 percent of respondents said they expect the number of jobs to increase at their companies over the next 12 months, while 13 percent said they expect a decrease. When asked what would lead them to hire in 2012, business owners said when revenue or sales have increased (27 percent), when the economy improves (20 percent) and if they need to support growth or expansion plans (17 percent).
Robert Lennon, president and CEO of SanDirect, a global data storage company, has added two new employees this year but when asked about growth, he said they anticipate continued growth, but are proceeding with caution. "Revenue increases will justify expanding our work force," said Lennon. "Ideally, I'd like to add up to six more employees in 2012, but I'm hesitant to assume that risk until we see concrete evidence of a market upswing."