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Optimism Among Small Business Owners at 5 Year High

A recent survey shows that small business owners are currently more optimistic than any time since the depths of the Great Recession.

According to the latest Wells Fargo/Gallup Small Business Index measure of small business optimism which was conducted January 6-10, the overall Small Business Index score increased to a positive 45 in January, up from a positive 24 in October. That’s a jump of 21 points, and the index score is the highest it has been since the third quarter of 2008.

“Several factors contributed to this quarter’s increase in optimism among small business owners,” explained Doug Case of Wells Fargo, “including higher scores for their current situations and future expectations about cash flow, less difficulty obtaining credit, and expected increases in revenue and hiring.

“There’s a lot for business owners to be hopeful about,” Case continued. “We’re coming off a record year in the stock market as the S&P 500 Index rose by its highest percentage since 1997. Congress avoided a government shutdown by approving a federal budget deal. We also have seen instances of growth in capital spending, another encouraging sign.”

Digging into the survey, we find the following details:

  • Improved cash flow: In the January survey, more small business owners said they had good cash flow over the past 12 months than they did last quarter (52% compared to 46%). A larger majority of business owners also expect to have good cash flow in 2014 (57% compared to 52%).

  • Increasing hiring: More small business owners said they expect to increase hiring in the next 12 months than in last quarter’s survey (22% compared to 16%).

  • Increasing revenue: A larger percentage of small business owners expect their revenue over the next 12 months to increase (48% compared to 44%).

  • Accessing credit: Fewer small business owners in the current survey reported having difficulty obtaining credit than did so last quarter (23% compared to 27%).

Interestingly, in the January survey, a majority of small business owners (55%) said if money were no object they would opt to continue working full or part-time, while 26% said they would retire completely, 13% would start another business and only 4% would choose to work for someone else.

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