- Small-business owners' optimism continues to be strong -- near a 10-year high
- Owners cite hiring difficulties as a top challenge
- Uncertain about effect of tax reform on their businesses
WASHINGTON, D.C. -- U.S. small-business owners continue to be optimistic about business conditions in the second quarter of 2018, according to the latest Wells Fargo/Gallup Small Business Index survey. In the quarterly survey, which measures small-business owners' attitudes about a wide variety of factors affecting their businesses, the overall index score is +106. This score is similar to last quarter's +107, but sits below the record-high +114 from 2006.
Finding Qualified Workers Presents Challenge to Small-Business Owners
The Wells Fargo/Gallup Small Business Index includes an open-ended question that asks small-business owners to name the most important challenge they face. In the current update, owners remain most likely to say that government policies and regulations are their most important challenge. Twenty percent mention this topic (including 7% who mention taxes and 7% who mention general government regulations).
Another 17% of owners cite hiring and finding qualified workers. By one percentage point, this is the highest percentage mentioning this topic since the question was first asked in 2013. The prior high was 16% in the fourth quarter of 2017.
Other mentions include economic and financial issues such as attracting customers (12%); the cost of running a business (7%); the economy (6%); and marketplace issues (11%) such as competition and marketing and product development. Eight percent cite the personal challenges of running a business or not having enough time.
|Most important challenge|
|Government policies (20%)|
|Economic issues (18%)|
|Attracting customers; targeting business opportunities; finding work/new business||12|
|Hiring qualified/good staff and retaining them||17|
|Financial issues (16%)|
|Costs/Fees of running the business; having enough money for capital investment||7|
|Financial stability; cash flow||6|
|Marketplace issues (11%)|
|Competition; larger corporations; internet||6|
|Marketing; advertising; reaching out; getting noticed||4|
|Product improvements; updated latest products; availability of products||1|
|Personal issues (8%)|
|Challenge of being own boss/working for self||7|
|Not enough time||1|
|Healthcare; costs of healthcare||4|
|Obamacare; ACA; government-mandated healthcare||1|
|Wells Fargo/Gallup, Quarter 2, 2018|
Many Owners Likely to Offer Raises and Bonuses in Coming Year
Small-business owners' concerns about the challenge of hiring are evident from their responses to other questions. Most importantly, 64% of owners strongly or somewhat agree that finding well-qualified employees will be a challenge for the growth of their business over the next 12 months. Perhaps reflecting the difficulty of retaining valued employees, 59% of owners say they are very or somewhat likely to offer salary or wage increases to their workers over the next 12 months, and 52% say they are likely to offer bonuses or new benefits.
Some Owners See Benefit From Tax Reform, but Many Are Uncertain
Small-business owners tend to be slightly more positive than negative about the current or future benefits of the new tax reform law, but many also say they are still unsure about what its benefits will be. A third of owners say the impact of the new law will be positive, including 12% who say it has already benefited their business and 21% who say it will benefit their business in the future. At the same time, 27% do not expect the law to benefit their business, and 39% are in the "too soon to know" category.
By comparison, 56% of national adults in Gallup's most recent survey said they didn't yet know whether their taxes would go up, go down or stay the same as a result of the new tax law.
Small-business owners remain optimistic about their business situation, with this quarter's Wells Fargo/Gallup Small Business Index showing a continuation of the increased optimism evident after the 2016 election. At the same time, owners continue to cite government regulations and rules as their biggest business challenge, and only a third at this point say the new tax law has benefited or will benefit their business. The strong economy and business growth have also introduced challenges for small-business owners -- especially in the area of hiring and finding qualified workers to help their businesses grow.
Results are based on telephone interviews with a random sample of 603 U.S. small-business owners in all 50 states, conducted April 2-6, 2018. For results based on the total sample of small-business owners, 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 https://wellsfargoworks.com/.
Learn more about how the Wells Fargo/Gallup Small Business Index works.