Upfront: Small business optimism 2017

By Steve Noe

If you consider yourself a small business owner with an optimistic outlook for your business in 2017, you’re not alone.

According to the latest Wells Fargo/Gallup Small Business Index, conducted Nov. 11-17, 2016, small business owners are the most optimistic they have been in eight years! More specifics about this quarterly small business survey, which measures the optimism of small business owners, are as follows:

In November 2016, the overall Index score increased significantly to 80 (up 12 points from July and up 26 points from November 2015). This represents the highest optimism reading since January 2008 when the Index score was 83, and the largest quarterly increase in a year. A major driver behind the increased optimism is how business owners are feeling about 2017. Forty-five percent say they expect the operating environment for their business will be better in 2017. The increase in small business optimism was largely driven by business owners’ expectations that their finances will improve in 2017.

Key drivers of the fourth quarter’s Index score included:

* Revenue: More than half (58 percent) expect their business’s revenue to increase a little or a lot in the next 12 months (up from 48 percent in July).

* Stronger cash flow: Seventy percent believe their cash flow will be somewhat good or very good in the next 12 months (up from 65 percent in July).

* Capital spending: Thirty-five percent say they plan to increase their capital spending a lot or a little (up from 25 percent in July).

* Hiring: Thirty-six percent expect the number of jobs at their company to increase a little or a lot over the next 12 months (up from 21 percent in July). This is the highest reading in the 13-year history of the survey.

“The latest overall Index score tells us that business owners are feeling positive about the future and have a renewed sense of confidence as they look to the year ahead,” Mark Vitner, managing director and senior economist for Wells Fargo Securities, said in the December 8 announcement of the survey results. “Not only do small business owners report that the operating environment for their businesses will be better in 2017 than it was in 2016, but business owners are anticipating growth for their businesses in the new year as more plan to increase their capital spending, add staff, and apply for credit.”

In the November survey, almost half (44 percent) of small business owners surveyed said they expect credit will be somewhat easy or very easy to obtain in the next 12 months (up from 37 percent in July). This represents the highest reading on this measure since January 2008 when 48 percent of small business owners said credit would be somewhat easy or very easy to obtain over the next 12 months.

Also in the survey, small business owners were asked about their priorities for the incoming president and Congress. Eighty-one percent said they should focus on actions relating to changes in the tax code, tax regulations, and tax rates for small businesses. Other top issues included actions relating to healthcare and the current healthcare law (76 percent), overall action on government regulations impacting small business owners (70 percent) and actions that could impact oil prices or energy costs (59 percent).

Slightly more than half (51 percent) think that actions taken by the new president and Congress in 2017 will make their businesses better off, 17 percent think their businesses will be worse off, and 26 percent think the actions will have no effect. Sixty-one percent say they think the new president will focus on the issues important to them as a small business owner.

For more specifics on the survey, visit www.wellsfargo.com. For a 2017 OPE industry outlook, please read OPE’s “2017 Industry Forecasts” on pages 14-21 and 30.

OPE Senior Editor Steve Noe