U.S.

WASHINGTON, D.C. — U.S. small-business owners are more optimistic now than at any point in the 15-year history of the Wells Fargo/Gallup Small Business Index. In the latest quarterly survey, which measures small-business owners’ attitudes about a wide variety of factors affecting their businesses, the overall index score is +118. This is higher than prior 2018 measures — with Quarter 2, 2018, at +106 and Quarter 1 at +107. The index now sits just above the record-high +114 from 2006.
The improvement in the index, based on interviewing conducted July 11-18, 2018, is driven by overall increases in most of the areas that make up the score, with record-high readings on several of these individual metrics. The biggest improvements compared with the second quarter of 2018 were found on the following items, most of which are now at high points in their trends:
Finding Qualified Workers Presents Challenge to Small-Business Owners
The Wells Fargo/Gallup Small Business Index includes an open-ended question asking small-business owners to name the most important challenge facing their businesses. In the current update, owners remain more likely to say that hiring poses a greater challenge than any other single issue, with 18% citing this as their top concern. Hiring is the only issue cited by at least 10% of owners.
In a separate question, 26% of owners say the number of jobs at their company increased over the past 12 months, up slightly from 24% last quarter and the highest in the history of the index. Meanwhile, only 8% of owners say the number of jobs at their business decreased over the past year, standing in sharp contrast to the high point of 35% who reported decreasing employment in the first quarter of 2010.
Further, 35% of owners expect that the number of jobs at their business will increase over the next year, the second-highest reading on this measure in the history of the index. This optimistic anticipation of new hires helps explain why many owners report that being able to find and hire good workers is their top challenge.
Other Challenges for Small-Business Owners
When individual response categories to the “most important challenge” question are combined into broader themes, more owners mention issues relating to government policies and regulations (24%) than any other such grouping. This broad category includes mentions of government regulations, taxes, and the government in general.
In addition to hiring concerns, owners are next-most likely to cite economic issues (15%), which include the challenge of attracting new customers and the economy in general. In addition, 15% mention financial issues — including costs and fees, financial stability, bill paying, and credit. Another 13% mention marketplace issues such as competition, marketing and products.
Bottom Line
Small-business owners are clearly feeling positive about their current situation — with record-high ratings on cash flows and overall improvements in their financial situation driving their optimism. Yet the improved economy has its downsides, manifested by owners’ concerns over being able to find, hire and retain qualified employees. Given businesses’ potential growth and an overall strong economy, ensuring that they have the workers/qualified employees to maintain that potential growth is key.