Wells Fargo Small Business Index: Business owners express slightly more optimism in Apri

SAN FRANCISCO – Despite concerns about a slowing U.S. economy, small business owners are a little more optimistic in April than at the start of the year, according to the latest Wells Fargo/Gallup Small Business Index conducted April 1-5. In the survey, more business owners said attracting customers and new business is the most important challenge they face today.

The Wells Fargo/ Gallup Small Business Index, a quarterly survey of U.S. small business owners, improved 7 points to positive 16 (+16) in April from positive 9 (+9) in January and negative 11 (-11) in November. While the Index is down from a year ago (April 2012), when it stood at positive 23 (+23), it’s the third highest reading since July 2008.

One key driver of the modest improvement from the first quarter survey is company cash flow, with 48 percent of business owners saying their cash flow was very good or somewhat good over the past 12 months, up significantly from 41 percent in January. This is the best cash flow reading since the first quarter of 2009. Fifty-three percent of owners expect their cash flow to be very or somewhat good over the next 12 months.

When asked to describe the most important challenge facing them today, 21 percent of small business owners said attracting customers and new business, making it the top concern. Government regulations was the second most frequent mention at 10 percent, followed by the weak economy at 9 percent, taxes at 9 percent, and healthcare at 8 percent. Four percent of business owners said credit availability was their biggest challenge.

“While we are seeing measured signs of recovery and businesses in general continue to improve their balance sheets, small business owners are still uncertain about the future,” said Marc Bernstein, Wells Fargo head of Small Business. “Small business owners, who now have stronger cash flow than at any time since the start of the Great Recession, tell us they’re focused on generating more steady sales, and many are holding off making investments in their business until that happens.”

Small Business Credit

More business owners said they are comfortable with their debt load today (61 percent) than are uncomfortable (37 percent). The number of business owners surveyed who said they have never used credit for their business has increased from a year ago. In the April survey, 32 percent of business owners said they have never borrowed money or used credit for their business, up from 24 percent a year ago.

Small Business Index Key Drivers

Wells Fargo, together with Gallup, surveys small business owners quarterly across the nation to gauge their perceptions of their present situation (past 12 months) and future expectations (next 12 months) in six key areas: financial situation, cash flow, revenues, capital spending allocation, hiring, and credit availability.

Index Scores: Q1 2012 – Q2 2013

For more information on the survey, and to download complete results, visit the Small Business Index section of Wells Fargo’s Business Insight Resource Center. The site features a video of Wells Fargo Senior Economist Mark Vitner, who provides comments on the second-quarter Index results.