Small business optimism up for 2013

Wells Fargo and Gallup have released their Small Business Index, which is a survey of small business owners on their current financial situation and their views on what the next 12 months have in store. The survey includes 601 small business owners, and was conducted during the first two weeks of this month.

The big takeaway from the survey is that small business owners are more optimistic about their prospects than last quarter. The index was up 20 points on overall optimism than in November 2012. This is due to business owners feeling positive about their performance in terms of revenues, capital spending, and jobs in the past year, and also feeling positive about their prospects for revenues, cash flow, jobs, and their overall financial situation in the year ahead. As Inc.com states, this is  “a dramatic turnaround from the end of last year, when the part of the index that measures business owners’ future expectations plunged to its lowest level since the start of the financial crisis.”

On the down side, it does not appear that hiring will increase significantly. Seventy-one percent reported that there will likely be no change in the number of jobs at their businesses, while the number of businesses that will add jobs did not increase from the last quarter. Even those who say they will hire are expecting to hire fewer jobs than they ideally would need. The primary reasons for this include that they don’t need any more workers, they are concerned about having enough consumer demand to support new jobs, the state of the economy, and potential costs of health care. Coincidentally, those businesses that are expecting to hire say they will do so because of increased demand.

These findings corroborate previous small  business surveys that we have reported on. Although there are a variety of issues that affect business owners, consumer demand and economic stability rank as the top factors. In order for these businesses to be successful, they need people to purchase the goods and services they offer. As the economy overall improves– and as individuals and families regain financial stability– the prospects for small businesses will also improve.

In related small business news, it appears that banks are also taking stock of their prospects when it comes to small business lending. Business News Daily reports that Bank of America, in response to its perception of small business lending as a growing opportunity  will be stepping up its efforts in this area, as it has recently hired more than 1,000 small business lending bankers. On the other hand, Bloomberg reports that Citigroup will be letting go of small business bankers, as a “realignment” within the company.

The economic recession and its ongoing impacts have changed the landscape for small businesses dramatically. From consumer demand to accessing capital, small businesses have faced a great deal of uncertainty in recent years. The various surveys of small businesses and the shifting roles of both big and small lenders all show that businesses and lenders alike are still trying to figure out and adjust to these changing conditions. But until the underlying challenges are addressed, the uncertainty will persist.  Many of the challenges faced by both businesses and lenders will be alleviated when economic recovery really reaches all communities– particularly those areas where small businesses are the main generators of economic activity.