Optimism among small business owners is strong, according to the latest quarterly Wells Fargo/Gallup Small Business Index conducted April 1-5. The survey also revealed that over half of business owners reported little impact to their tax situation along with a rising interest in credit.
Strong overall optimism correlated with high levels of confidence in present and future financial situations as well, with scores of 62 and 67 respectively. Additional indicators that typically drive higher optimism had strong showings as well. Fifty-two percent of respondents described revenues as increasing over the past twelve months, while 74 percent said the same of the previous year’s cash flow rating. Estimates of these indicators over the next twelve months also had strong scores, with 58 percent of respondents expecting gains in revenues while 79 percent expect a somewhat or very good cash flow rating. When asked how they would rate the current state of the national economy 63% responded it is either “good” or “excellent.”
“What we’re hearing from business owners regarding their revenues and cash flow are encouraging indicators, particularly in a time when many are looking closely at their finances for tax season,” said Andy Rowe, Wells Fargo head of Customer Segments. “Combining these insights with their overall outlook on the economy and a healthy interest in obtaining credit paints a promising picture for businesses as they move forward through 2019.”
This quarter’s survey specifically looked at how small business owners felt about their tax situation a year after the reformed tax regulations took effect. Nearly half of business owners (48 percent) indicated that the recent legislation had little effect on their 2018 taxes, while 51 percent said the same regarding impacts to their business overall. When asked how their total tax bill for 2018 would be impacted, 56 percent said it would be about the same as expected, while 22 percent predicted higher and 12 percent said lower.
Access to Credit
Another aspect which correlated with strong optimism was access to credit. 53 percent of business owners indicated that credit was somewhat or very easy to obtain in the last twelve months, with the exact same number predicting this level of ease in obtaining credit in the coming twelve months. In addition, only 1 percent of respondents indicated credit availability as the top challenge they are facing. Also, over one-quarter of small business owners (26 percent) indicated they were interested in applying for a new credit product (such as a loan, business credit card or line of credit) in the next twelve months.
Top challenge: Attracting new business
Attracting new business is the top challenge for small business owners, with 11 percent of owners indicating it as the leading issue. In addition, 10 percent of owners cited hiring as the top challenge, which tied with taxes, in keeping with the timing of the survey, and with competition from competitors/larger corporations.
Financial stability was also cited by 10 percent of respondents, followed by government regulations, which were cited by seven percent.