U.S. Small-Business Owners' Optimism Levels Off

PRINCETON, N.J. -- Small-business owners' level of optimism about their business situation is essentially unchanged from the first quarter of this year and matches the level of optimism found one year ago. The Wells Fargo/Gallup Small Business Index is now at +64, similar to the +67 recorded in the first quarter but up from +54 in the fourth quarter of 2015. Optimism remains well below the high points registered in the years before the recession.

The quarterly survey, which measures small-business owners' ratings of their business' current situation and their expectations for the next 12 months, jumped in the first quarter of the year after posting three consecutive quarters of declines. The index score has returned to the level found one year ago, indicating that after some fluctuation, small-business owners' feelings about the state of their current and future financial situations have shown no net improvement year to year.

Small-business owners' estimates of their cash flow, which improved in the first quarter, have now settled back to the levels found in the second half of 2015. The other measures that make up the overall index score -- which include small-business owners' financial situation, company revenue, capital spending, hiring and ease of obtaining credit -- show little change compared with the first-quarter results.

Attracting Customers Continues to Be Top Challenge

When small-business owners are asked to identify the most important challenge facing their business, 16% cite attracting customers and finding new business. Other top concerns include the economy (10%), government regulations (10%), and hiring and retaining qualified staff (9%). Small-business owners have consistently reported these issues as top concerns since early 2013, although the order of concerns shifts slightly from quarter to quarter.

	Total %
Attracting customers/Targeting business opportunities/Finding new business	16
Government regulations	10
The economy	10
Hiring qualified/good staff and retaining them	9
Taxes	9
Financial stability/Cash flow	6
Government (general)	6
Competition/Larger corporations/Internet	5
Costs of running the business/Having enough money for capital investment	5
Marketing/Advertising/Reaching out/Getting noticed	5
Credit availability	3
Healthcare/Costs of healthcare	2
Not enough time	2
Employee benefits	2
Challenge of being own boss/working for self	1
Product improvements/Updated products/Availability of products	1
Healthcare/Obamacare	1
No jobs/Lost job/Laid off	-
Accounting/Bill paying	-
No choice/Forced into it	-
Everything	-
Other	3
April 4-8, 2016
Wells Fargo/Gallup Small Business Index

Bottom Line

After steadily improving from the lows found during and after the Great Recession, small-business owners' optimism has leveled off over the last year and a half. The current index reading of +64 is more than 90 points higher than at points in 2010, but still well below readings for the years prior to 2008. The question remains as to whether small-business owners' optimism will eventually return to the more positive levels seen before the recession or whether that trauma ushered in a new normal of sorts, such that owners' optimism may never fully recover.

Survey Methods

Results are based on telephone interviews with 600 U.S. small-business owners in all 50 states, conducted April 4-8, 2016. The margin of sampling error is ±4 percentage points at the 95% confidence level.

For more information about Wells Fargo Works for Small Business, visit WellsFargoWorks.com.

Learn more about how the Wells Fargo/Gallup Small Business Index works.