Small Businesses Round Out Year on High Note
Small business owners are a hardy lot, known to carry on in the face of adversity.
That trait is reflected in the Wells Fargo/Gallup small business index for the fourth quarter of 2013, a composite index based on a poll of more than 600 entrepreneurs. Despite a government shutdown and concerns over the new health care law in October, small-business owners said they are experiencing stronger revenue growth, and the majority rate their financial position as good.
The survey resulted in a score of 24. That was down one point from the third quarter of 2013, but represents a dramatic increase from the same quarter a year ago, when the index was in negative territory. The score continues to be off dramatically from highs of between 45 and 110 achieved prior to the 2008 recession.
"Businesses continue to see gradual improvement in day-to-day operations for the first time since the recession, and more said revenue increased than decreased," an important precursor to boosting payrolls and capital expenditures, Mark Vitner, senior economist for Wells Fargo says.
The majority of small business owners rated their current financial situation as good. A majority also said they think their financial situation will continue to be good in 2014.
Thirty-four percent said revenue had increased, up five percentage points from the fourth quarter last year. By contrast, 33 percent said revenue in the past year had decreased, a decline of 12 percentage points from the same period a year ago.
"The revenue trend is the most significant new development," Vitner said. "We finally have breached the break-even point, where more firms are seeing revenue increase than decrease, and so we are close to the point where small business might expand operations."
Nearly half of the small business owners said they expect revenue to increase in the next 12 months.
Generally speaking the survey indicates that small businesses continued at steady levels with capital spending and employee levels, with plans to maintain both levels going into 2014. But health care costs and government regulation loom as topics of concern.
One area of contention that emerged was over a proposed increase of the national minimum wage to $9.50 an hour. Half of those surveyed said they disapprove of a wage hike, although 64 percent said it would not cause them to reduce their workforce.
"A lot of small business owners aren’t all that directly impacted by the minimum wage," Vitner says.