After reaching a seven-year high in January, small business owners are feeling less optimistic today than they were a year ago.

Oli Scarff, ThinkStock

The Wells Fargo/Gallup Small Business Index released on Dec. 7 for the fourth quarter of 2015 showed the overall index score dipped from 59 in August to 54 in November, the lowest since July 2014. It’s also the third quarter in a row that the score has dropped, after starting the year at 71.

“I think a little bit of what’s playing into this is the uncertainty in the world is playing a factor and that’s got some small business owners concerned," said Lou Gallo, senior vice president of business banking in New Jersey for Wells Fargo. "You’re seeing in some of the other numbers that business owners are actually paying down debt and I think that’s a sign that they don’t want to be in a position where they were in 2008 when access to capital was a little tough.”

 

Small business credit findings included:

  • Thirty-eight percent of small business owners say they have less debt now than they did a year ago, compared to 26 percent in April 2013.
  • More business owners reported being comfortable with the amount of business debt they carry (40 percent), up from 29 percent in April 2013.
  • Just 10 percent of business owners expressed difficulty paying down their current business debt, down from 18 percent in April 2013.

“I think small businesses overall have done a lot of good things to try and improve on their revenue and they’ve cut expenses. They’ve gotten a lot leaner,” Gallo said. “At the same time bottom line revenues are better.”

Most measures in the index saw declines or no improvements:

  • Thirty-nine percent of small business owners said that their company revenues increased a little or lot in the last 12 months, a 10 percentage point drop from the first-quarter survey in January.
  • Sixty-five percent of small business owners rate their financial situation as very or somewhat good, essentially unchanged from a year ago (64 percent).
  • Twenty-six percent of small business owners said their company increased the amount of money earmarked for capital spending in the past 12 months, essentially unchanged from 27 percent a year ago.
  • Seventeen percent of business owners increased the number of jobs at their company in the last 12 months, essentially unchanged from a year ago (18 percent).

“I think they’ve done what they needed to do overall in terms of trying to be lean and mean. They’re looking at different ways of driving sales so they’re using social media at the same time as their traditional sales tactics to try and drive new business,” Gallo explained.

Business owners said their biggest concern was government regulations (13 percent) followed by attracting customers and finding new business (11 percent), and hiring and retaining quality staff (10 percent).

“Businesses fell pretty good for the most part. There’s still some caution,” Gallo said.

The index surveyed small business owners on ratings of the current situation of their businesses and ratings of how they expect their businesses to perform over the next 12 months. They were asked 12 questions in six key areas: financial situation, cash flow, revenues, capital spending allocation, hiring and credit availability.

Results are based on telephone interviews with 606 small business owners, with annual revenues up to $20 million, in all 50 states. It was conduced from Nov. 9 to 13.

Kevin McArdle has covered the State House for New Jersey 101.5 news since 2002. Contact him at kevin.mcardle@townsquaremedia.com. Follow him on twitter at @kevinmcardle1.

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