According to a recent study, small business optimism is holding steady at … zero.
Wells Fargo &Co.'s third quarter "Small Business Index" found that small business owners are feeling neither optimistic nor pessimistic about their business outlook or current situation. The survey asks respondents to give their perceptions on their financial situation, cash flow, revenues, capital spending allocation, hiring and credit availability.
The survey was conducted with Gallup via phone with 605 small business owners across the country. The overall index can range from -400 to +400.
“Business owners are demonstrating a reluctance to invest in their businesses and are holding onto cash,” Doug Case, Wells Fargo small business segment manager, said in a release. “In recent months, we’ve seen strong growth in deposit balances as business owners prepare for potential business challenges and save for future opportunities.”
Improvements were found in respondents' current outlook on their financial situation, cash flows, hiring and credit availability. The report found 53% of respondents rated their present financial situation as "somewhat" or "very good," up from 47% during the second quarter of 2011. Additionally 28% said their current situation was "somewhat" or "very poor," down five points from 33% in the second quarter of 2011.
As far as cash is concerned, 42% of respondents said their present cash flow is "somewhat" or "very good," up from 38%. Hiring also grew, with 14% saying the number of job openings at their business increased a lot or a little, up from 10% last quarter. Credit availability was the only negative in this portion of the survey, with 34% responding it was "somewhat" or "very difficult" to obtain credit, up four points from last quarter.
Future outlooks were not as sunny for respondents. Revenue outlook fell, with 42% expecting increases in their company's revenues, down from 49% in the last quarter. Capital spending estimates also fell, with 21% of respondents expecting the amount of money they allocate toward capital spending to increase, down from 26% in the last quarter.