Small business owners more optimistic about their companies' prospects, surveys show

NEW YORK, N.Y. – Small business owners are getting more optimistic about their companies, according to two surveys released Tuesday.

Improving company finances helped lift owners optimism in a survey conducted in early April by Wells Fargo & Co. and Gallup. The Wells Fargo/Gallup Small Business Index rose 7 points to 16 from 9 in January and from minus-11 in November. The index is still down from 23 in April 2012.

Owners reported their cash flow was improving — 48 per cent said their cash flow was very good or somewhat good during the previous 12 months, up from 41 per cent in January. That’s also the best reading on cash flow since the first quarter of 2009. Fifty-three per cent of owners expect cash flow to be good over the next 12 months.

The improvement also likely reflects an easing of owners’ anxiety after it became clear in January that the nation wasn’t going to go over what was called “the fiscal cliff.” That’s the combination of federal tax hikes and budget cuts that were scheduled to happen on Dec. 31. The tax hikes affected fewer business owners than expected, and the budget cuts were deferred until March 1.

A separate survey by the Kauffman Foundation and LegalZoom found that 84 per cent of entrepreneurs — owners of very young companies — are confident about their companies’ profits in the next year. That’s up 1 percentage point from the fourth quarter of 2012.

While entrepreneurs in the survey are feeling good about their own prospects, their faith in the U.S. economy is weakening. Thirty-nine per cent said they expect the economy to improve over the next 12 months, down from 44 per cent in the fourth quarter. That’s making them pull back on hiring plans — 32 per cent said they’re planning to hire in the next year, down from 37 per cent.