Login or signup
36
GROW

Small Business Owners See Trouble Ahead

Small business owners are expressing more uncertainty about the year ahead than they have since the financial crisis, according to a new survey.

Advertisement

The economy may be on the mend and politicians may be making progress on the fiscal cliff, but small business owners are expressing dire pessimism about the year ahead.

That's according to a fourth quarter survey released Friday morning from Wells Fargo and Gallup, which polled 607 small business owners in the week following the presidential election.

The numerical index upon which the survey is based fell 28 points into negative territory--the largest drop since the fourth quarter of 2010. More significantly, small business owner outlook for the next 12 months, an index component, tumbled 19 points, the largest drop since the fourth quarter of 2008, at the height of the financial collapse.

"We do not historically see movements this large," Marc Bernstein, head of Small Business for Wells Fargo, says.

In the next 12 months, small business owners said they would have less revenue, forecasted more layoffs, and indicated they expected capital spending and cash flow to become more constrained.

Among the things that may have contributed to future sentiments are uncertainty about the country's fiscal stability, taxes, and consumer spending, all of which could severely impact small business owners, Bernstein says.

Twenty-nine percent of those surveyed said revenues would decrease, compared to 18% in the previous quarter. Twenty-one percent said the number of jobs at their company would decrease, an increase of 11 percentage points from the previous quarter, and the highest reading in the history of the survey, which has been conducted quarterly since 2003.

More than one third of business owners said they expect to decrease capital spending in the year ahead, an increase of about 10 percentage points from the previous quarter. And nearly a third said they expect cash flow and their financial situations each to be poor, also the highest readings for the survey.

The current quarter also indicated significant problems during 2012. Nearly half of respondents reported decreased revenues for the prior 12 months, while 40% noted less capital spending, and more than a quarter reported layoffs. Those numbers all edged up from the prior quarter.

"I am hoping there were special factors that caused people to be pessimistic [after the election] that will be resolved next time we do the survey," Bernstein says. Wells Fargo has more than 2.5 million small business customers.

 

Last updated: Nov 30, 2012

JEREMY QUITTNER is a staff writer for Inc. magazine and Inc.com. He previously covered technology for American Banker and entrepreneurship for BusinessWeek.
@JeremyQuittner




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Comment and share features
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: