SAN FRANCISCO–(Businesswire)–Optimism among small business owners showed no significant change in January, despite improved business owner outlook for revenue, capital spending and cash flow, according to the latest results of the quarterly Wells Fargo/Gallup Small Business Index.
Concluded January 22, the latest Wells Fargo/Gallup Small Business Index optimism score came in at negative 16 (-16), a one-point decrease from the previous survey (conducted in October 2009), and 130 points lower than the Index high of 114 (conducted December 2006). A score of zero indicates that small business owners, as a group, are neutral — neither optimistic nor pessimistic — about their companies’ situations.
The Index is the sum of “present situation” and “future expectations” of small business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability. The “present situation” score decreased slightly, down five points to negative 29 (-29), the lowest present situation score in the history of the Index. “Future expectations” increased four points, from nine to 13.
Of the six key measures, the following measures served as main drivers of the Index score during this survey:
Cash Flow – 42 percent rated their cash flow as somewhat poor or very poor for the past 12 months, up from 36 percent in Q409
Revenues – 48 percent expect revenue increases over the next 12 months, up from 42 percent in Q409
Capital Spending Allocations – 24 percent expect spending to increase in the next 12 months, up from 19 percent in Q409
For the last 27 quarters, 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. An Index score of zero indicates that small business owners, as a group, are neutral — neither optimistic nor pessimistic — about their companies’ situations.
Results are based on telephone interviews with 605 small business owners in the continental United States conducted January 18–22. The overall Small Business Index is computed from a formula that scores and sums the answers to 12 questions— six about the present situation and six about the future. The overall Index can range from -400 (the most negative score possible) to +400 (the most positive score possible), but in practice takes on a much more limited range. The margin of sampling error is +/- four percentage points.