Are you feeling good about your business’s prospects for the coming year? You’re not alone. U.S. small business owners are feeling more optimistic about their futures than they have been at any time since the Great Recession hit in 2008, a recent Gallup poll shows.
Although small business owners’ spirits still haven’t reached pre-recession levels, The Wells Fargo/Gallup Small Business Index improved to +25 in July, up from +16 in the second quarter of this year. (The Index measures small business owners’ feelings about their current situation, including financial status, ease of getting credit, cash flow, revenues and number of jobs, as well as future outlook.)
Of course, prior to the recession, the Index scores were generally in triple digits—hitting a high of 114 in December 2006 and a low of -28 in July 2010. Clearly, there’s a long way to go to hit those heights again—but why are small business owners’ outlooks improving?
Gallup says that while small business owners’ assessments of their own situations are mostly flat, their hopes for the future seem to be rising. When asked to rate their present situation, the Index was at 4—up from 2 in the second quarter of the year. But when asked to rate future expectations over the next 12 months, the Index rose to 21.
One big factor in small business owners’ positive outlook for the coming year is the growing ease of obtaining credit. Just 25 percent say they’ve had difficulty obtaining credit in the past 12 months, down from 30 percent who said so in the first half of the year. And only 30 percent expect obtaining credit to be difficult in the next 12 months, compared to 36 percent who said so in the second quarter.
Small business owners’ confidence may also have something to do with rising consumer confidence. Although the latest Gallup poll shows consumer confidence is down slightly, it hit new peaks in May and June, and consumer spending rose accordingly.
Clearly, the economic outlook is still uncertain, with both consumers and business owners changing their opinions day by day. With the Affordable Care Act being rolled out over the next several months still a “wild card” in terms of what it will mean for small businesses’ costs, cash flow and hiring, business owners’ opinions could swing decidedly negative. But overall, the rising confidence small business owners have for the future is good news.