Optimism among US small businesses still rising steadily

While small business owners around the country may still not be as optimistic as they were before the recession hit in 2008, there has nonetheless been a slow and steady increase since bottoming out in mid 2010.

According to the latest Wells Fargo/Gallup Small Business Index, small business owner optimism rose to its highest level in years during July. Last month’s index came in at +49, up from +47 set in April and the +45 reading that kicked off the year in January.

What could be most significant about the latest data is the Present Situation component of the index, which registered at +18 in July. This marked the highest reading since the third quarter of 2008.

However, this wasn’t the only aspect of the index that demonstrated renewed optimism among America’s small businesses. The business owners who responded to the survey noted that sentiment toward revenues, cash flow and credit had all improved over previous quarters.

About 43 percent of respondents stated that their revenues had increased in the past year, up from 36 percent who said the same in the second quarter. Another 55 percent said their cash flow situation had improved over the previous year, and 32 percent said that it has been very easy or somewhat easy to obtain credit in the past 12 months.

Hurdles still remain
Despite these improvements in the index, many small business owners expressed concern over a few factors that haven’t yet snapped back from their mid-recession lows. With more money coming in but many risks still present, it could signal higher demand for small business insurance in the weeks and months ahead.

One of the top challenges, according to survey participants, is attracting new customers to the business. In total, 13 percent of respondents named this as the “most important challenge” they are currently facing. The difficulties of dealing with new government regulations and maintaining the financial stability of their businesses tied for second as the most pressing issues.

To uncover more about the difficulties in attracting customers, respondents were asked what the single greatest challenge was that they faced when it came to building out their customer base. The greatest challenge, at 14 percent, was improving marketing and advertising efforts and reaching out to potential customers.

Still, economists expect optimism to improve even further if the current situation holds strong.

“We know many businesses still face challenges in the marketplace and it’s reflected in the survey results,” said Lisa Stevens, head of Small Business for Wells Fargo, according to the Birmingham Business Journal. “Many continue to wait for more improvement in their businesses and the economy before they express confidence in the year ahead.”