Small Talk: Not out of the woods yet
Even with the recent positive news that the jobless rate had dropped from 10 to 9.7 percent, the study – conducted on January 22 – showed virtually no change in small business optimism from the last report in October.
The Wells Fargo/Gallup Small Business Index optimism score came in at -16, which was down one point from October 2009 and reflects an overall negative outlook by small business owners on their companies. A zero score would indicate that small business owners have a neutral opinion about their outlook.
The report is compiled from telephone interviews with 605 U.S. small business owners and the results are tabulated from a formula that scores and sums the answers to 12 questions – six about the present situation and six about the future. Respondents were asked about their financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability.
Even last month’s U.S. Commerce Department report that showed 2009 fourth quarter Gross Domestic Product grew at the fastest pace in six years, was not enough to brighten the spirits of small business owners, of which 42 percent said their cash flow was somewhat poor or very poor for the last 12 months, up from 36 percent during the last quarter.
The news wasn’t all bad, as the Wells Fargo poll showed 48 percent of business owners expect an increase in revenue in the next year, up from 42 percent and 24 percent expect their spending to increase in 2010, compared to 19 percent during Q4 2009.