Small business owners are more upbeat about their prospects in the new year, according to the latest results of a quarterly survey.
The Wells Fargo/Gallup Small Business Index jumped 13 points to 67 for the first quarter. The gain was the largest in a year and reversed three straight quarters of declines.
“The latest index scores show that small business owners are more upbeat about their current and future business conditions,” said Lisa Stevens, head of small business for Wells Fargo. “Similar to what we’ve seen in some consumer confidence surveys, improvements reported in the January survey indicate the optimism of small business owners rebounded after trending downward for much of 2015.”
The latest index results are based on telephone surveys with 600 small business owners conducted between Jan. 11 and 15. The overall score is based on the answers to a total of 12 questions about present conditions and expectations for the coming year. Readings above 0 indicate business owners responding to the survey are more optimistic than pessimistic. The index has ranged from a high of 114 in the fourth quarter of 2006 to a low of negative 28 in the third quarter of 2010.
For the first quarter of 2016, the score for the present situation rose five points to 26. The score for expectations rose eight points to 41.
The bounce in optimism benefited from small business owners responding to the survey feeling better about their cash flow, with 60 percent saying their cash flow was somewhat or very good over the past year — the highest reading since 2007. Moreover, 66 percent of owners said they expect cash flow to remain somewhat or very good during the coming year.
Most other index measures — including those for hiring, capital spending and revenue — had smaller increases or remained unchanged.
The latest survey also asked small business owners about their attitudes toward chip-enabled debit and credit cards. Merchants were required to convert by Oct. 1 to systems capable of processing the cards or accept liability for fraudulent transactions.
Almost half of small business owners — 48 percent, to be exact — responding to the survey said their processing systems accept chip-enabled cards. Of those owners who haven’t yet converted their systems, 22 percent said they expect to do so over the next six months and 14 percent plan to convert within a year. The remaining 20 percent of owners said they don’t intend to change systems.
Meanwhile, 51 percent of owners said they use mobile devices to conduct banking related to their businesses.