Wells Fargo Survey: Business Owners Show Strong Optimism, Confidence in Economy

In contrast, over half of business owners see little impact from tax
reform in 2018, other highlights include interest in credit and shifting
challenges

SAN FRANCISCO–(BUSINESS WIRE)–Optimism among small business owners is strong, according to the latest
quarterly Wells
Fargo/Gallup Small Business Index
conducted April 1-5. The survey
also revealed that over half of business owners reported little impact
to their tax situation along with a rising interest in credit.

Strong overall optimism correlated with high levels of confidence in
present and future financial situations as well, with scores of 62 and
67 respectively. Additional indicators that typically drive higher
optimism had strong showings as well. Fifty-two percent of respondents
described revenues as increasing over the past twelve months, while 74
percent said the same of the previous year’s cash flow rating. Estimates
of these indicators over the next twelve months also had strong scores,
with 58 percent of respondents expecting gains in revenues while 79
percent expect a somewhat or very good cash flow rating. When asked how
they would rate the current state of the national economy 63% responded
it is either “good” or “excellent.”

“What we’re hearing from business owners regarding their revenues and
cash flow are encouraging indicators, particularly in a time when many
are looking closely at their finances for tax season,” said Andy Rowe,
Wells Fargo head of Customer Segments. “Combining these insights with
their overall outlook on the economy and a healthy interest in obtaining
credit paints a promising picture for businesses as they move forward
through 2019.”

Taxes

This quarter’s survey specifically looked at how small business owners
felt about their tax situation a year after the reformed tax regulations
took effect. Nearly half of business owners (48 percent) indicated that
the recent legislation had little effect on their 2018 taxes, while 51
percent said the same regarding impacts to their business overall. When
asked how their total tax bill for 2018 would be impacted, 56 percent
said it would be about the same as expected, while 22 percent predicted
higher and 12 percent said lower.

Access to Credit

Another aspect which correlated with strong optimism was access to
credit. 53 percent of business owners indicated that credit was somewhat
or very easy to obtain in the last twelve months, with the exact same
number predicting this level of ease in obtaining credit in the coming
twelve months. In addition, only 1 percent of respondents indicated
credit availability as the top challenge they are facing. Also, over one
quarter of small business owners (26 percent) indicated they were
interested in applying for a new credit product (such as a loan,
business credit card or line of credit) in the next twelve months.

Top challenge: Attracting new business

Attracting new business is the top challenge for small business owners,
with 11 percent of owners indicating it as the leading issue. In
addition, 10 percent of owners cited hiring as the top challenge, which
tied with taxes, in keeping with the timing of the survey, and with
competition from competitors/larger corporations.

Financial stability was also cited by 10 percent of respondents,
followed by government regulations, which were cited by seven percent.

Updated methodology

As the landscape of small business ownership and operation has shifted,
specifically with the rise of digital/online facets, the Wells
Fargo/Gallup Small Business Index has recently shifted its methodology
from the previous phone-based surveying to a web-based model. This
change was made to reflect the reality of how businesses and their
owners operate and to mitigate any biases in the types of businesses
owners responding, as well as the responses themselves.

“Having surveyed the small business landscape for more than 15 years,
the Small Business Index provides valuable insight into current and
future perceptions of business owners,” said Doug Case, Small Business
Segment Strategy and Design, Wells Fargo. “These recent updates reflect
our interest in ensuring that the index accurately represents small
business owner sentiment and providing the business communities with
relevant information and resources.”

Wells Fargo/Gallup Small Business Index Scores: Q2 2018 – Q2 2019

             
   

Overall Index
Score

 

Present
Situation

 

Future
Expectations

Q2 2019 (surveyed April 2019)*   129   62   67
Q1 2019 (surveyed January 2019)   106   46   60
Q4 2018 (surveyed November 2018)   129   59   70
Q3 2018 (surveyed July 2018)   118   52   66
Q2 2018 (surveyed April 2018)   106   45   61

*Using updated web-based surveying methodology. Results from
the web mode are not directly comparable to the prior phone survey.

About the Wells Fargo/Gallup Small Business Index

Since August 2003, the Wells Fargo/Gallup Small Business Index has
surveyed small business owners on current and future perceptions of
their business financial situation. The Index consists of two
dimensions: 1) Owners’ ratings of the current situation of their
businesses and, 2) Owners’ ratings of how they expect their businesses
to perform over the next 12 months. Results are based on web-based
surveying with 600 small business owners, with annual revenues up to $20
million, in all 50 United States conducted April 1-5, 2019. The overall
Small Business Index is computed using a formula that scores and sums
the answers to 12 questions — six about the present situation and six
about the future. An Index score of zero indicates that small business
owners, as a group, are neutral – neither optimistic nor pessimistic –
about their companies’ situations. The overall Index can range from -400
(the most negative score possible) to +400 (the most positive score
possible), but in practice spans a much more limited range.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, investment and mortgage products and
services, as well as consumer and commercial finance, through 7,700
locations, more than 13,000 ATMs, the internet (wellsfargo.com) and
mobile banking, and has offices in 32 countries and territories to
support customers who conduct business in the global economy. With
approximately 262,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was ranked No. 26
on Fortune’s 2018 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at Wells
Fargo Stories
.

Wells Fargo serves approximately 3 million small business owners across
the United States and loans more money to America’s small businesses
than any other bank (loans under $1 million, 2002-2017 Community
Reinvestment Act government data). To help more small businesses achieve
financial success, Wells Fargo introduced Wells
Fargo Works for Small Business®
– a broad
initiative to deliver resources, guidance and services for business
owners. For more information about Wells Fargo Works for Small
Business,
visit: WellsFargoWorks.com.
Follow us on Twitter @WellsFargoWorks.

About Gallup

For more than 70 years, Gallup has been a recognized leader in the
measurement and analysis of people’s attitudes, opinions and behavior.
While best known for the Gallup Poll, founded in 1935, Gallup’s current
activities consist largely of providing marketing and management
research, advisory services and education to the world’s largest
corporations and institutions.

Contacts

Manuel Venegas, 213-253-6531
manuel.venegas2@wellsfargo.com

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