In another sign of our improving economy, our latest Wells Fargo/Gallup Small Business Index survey of small business owners finds optimism continuing to trend up as conditions improve for their businesses.
Conducted July 7-11, the quarterly survey of 600 small business owners measures current and future perceptions of business health. The overall index score of positive 49 reported in third quarter 2014 is up two points from April.
This slight uptick matches what we’re seeing in the economy overall: Optimism is up, but still a long way from pre-recession levels.
The change in the “present situation” score, or how business owners rate the current conditions for their businesses, drove much of the gains. It’s now at positive 18, which is higher than at any other point since third quarter 2008.
Businesses are cautiously optimistic
In our July survey (see an infographic of the results), more small business owners reported that their company’s revenue has increased during the past 12 months (43 percent) than reported an increase in the April survey (36 percent). Cash flow and the ease of obtaining credit during the past 12 months also have improved.
But all the good news is tempered by a less-positive trend: Small business owners remain wary of the future. In fact, the “future expectations” score in our survey is positive 31, down two points from the second quarter.
That’s an area of concern since business owners are optimists by nature. The fact is, small business owners still face a host of challenges. In our survey, they put attracting and retaining customers, growing sales, and finding new business atop the list. When asked for the biggest obstacle to generating new business, small business owners cited: marketing and advertising (14 percent); competition (13 percent); making product improvements and having the latest products (10 percent); and the costs of running the business (10 percent).
Tackling business challenges with technology
What keeps us motivated and encouraged about the future are the countless business owners we work with who are overcoming challenges and finding opportunities every day — including using technology to work smarter and reach more customers.
In fact, we added questions to our latest survey about the impact and use of technology in business. The results clearly show that many are using mobile technology to run and market their businesses and to communicate with their customers.
Fluzzle Tube, based in Sonoma Valley, California, is a case in point. The company name comes from the connective, floating, puzzle-shaped water tubes it makes. Recent college grads, Fluzzle Tube’s co-founders Eddie De Arkos and Clark Whitehead count themselves among the business owners (and Wells Fargo customers) who say sales are up and who expect more of the same in the year ahead.
Running their company often keeps them out of the office, and out on the river. Fluzzle Tube is among the 40 percent of businesses that told us they are using smartphones, tablets, and other mobile devices to do business.
Says Eddie, “I think technology has been the reason we’ve grown exponentially between year one and year two. The Wells Fargo mobile app we use helps our business be more efficient because we’re able to check on the spot how much money we have, and whether transfers went out. We can take pictures of our checks from large retailers using our mobile devices and can submit and transfer them wherever they need to go.”
It’s encouraging to work with companies like Fluzzle Tube as they find creative ways to build and grow their company at a time when many remain cautious.
It may take time before overall small business optimism and future expectations return to pre-recession levels, but customers like Eddie and Clark remind me every day that the economy is slowly improving, and good things really do lie ahead.
Case is Wells Fargo’s Small Business Segment manager responsible for the strategic direction of Wells Fargo’s focus on small business, which includes the Wells Fargo Works for Small BusinessSM website on wellsfargo.com and its research, tools, and other resources for existing and prospective business owners. Today, Wells Fargo serves approximately 3 million small business customers with annual revenues up to $2 million. Since August 2003, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on current and future perceptions about the financial condition of their business.