Small-Business Outlook Declines

Owners continue to struggle with lower revenue and higher costs, a survey finds.

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The nation's small-business owners have struggled with lower revenue and higher costs in recent months, Wells Fargo reported this week.

Based on a Gallup poll of 600 owners nationwide, the San Francisco-based financial services firm's quarterly small-business optimism index fell to an all-time low, continuing a five-quarter slide. The index was launched in August 2003.

All six index components declined over the opening quarter, including measures for finances, cash flow, revenue, capital, hiring and credit.

"The nearly 50-percent drop in the index clearly reflects the intensified financial pressures small-business owners have felt over the last three months," Scott Andersen, the lender's chief economist, said in a statement.

Anderson said federal tax rebate checks mailed out earlier this month should give many businesses a boost by the third quarter. The checks are part of a $160-billion government plan to kick start the sagging U.S. economy.

According to Discover, cash flow issues are already improving at many small businesses. In a survey of more than 1,000 small-business owners released this week, only 39 percent reported cash flow problems in May, down from 44 percent in April. Fewer owners also said they felt the economy was getting worse.

"Cash flow is such a key indicator that whenever business owners tell us cash issues have improved, we expect to see a rise in confidence," Ryan Scully, the director of Discover's business credit card, said in a statement.

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