Sorting through recent surveys gauging the mood of small-business owners can seem a bit...confusing.
Last month, Bank of America released a survey saying small-business optimism is at its highest since 2012. This week, the latest Wells Fargo/Gallup Small Business Index reported small-business owners are less optimistic today than they were a year ago.
The National Federation of Independent Business owners released similar news this week about small-business optimism being down.
So, which survey is right?
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I posed that question to Dr. Stan Mandel. He’s an executive professor, and director of the Angell Center for Entrepreneurship based at Wake Forest University School of Business.
After reviewing the surveys, Mandel found they all have one thing in common: They show that, for the most part, the small-business sector is strong.
“(Small businesses) realize that they’ve got to show a profit at the end of the day. And they’re demonstrating that they are really up to the task,” Mandel says.
“It reflects well on this sector of our economy...There are so many more small businesses that cumulatively, this is what drives job growth and GDP and everything else...we should pay attention to that.”
But there are some differences worth noting.
First, the specifics: Bank of America’s survey, released mid-November, involved a phone survey of 1,001 small-business owners reached Aug.21 through Sept. 22.
Wells Fargo’s survey, released this week, polled 606 small-business owners by phone on Nov. 9-13.
NFIB, which conducts a monthly survey, sampled 601 of its members for the November report.
Here’s why Mandel says the surveys show overall good news for the small-business sector:
▪ Financials: The Wells Fargo/Gallup poll reports 65 percent of owners rate their financial situation as very good or somewhat good. And 38 percent say they have less debt now than they did a year ago, compared to 26 percent when the question was asked in April 2013. “That would indicate that profits are probably up,” Mandel says.
▪ There’s still optimism: The NFIB reports its optimism index of 94.8 is below the 42-year average of 98. (A score of 100 reflects business conditions in 1986.) While the federation reports the score as low, “But it’s also reflective of the fact that small businesses tend to be more optimistic than pessimistic,” Mandel says.
▪ Hiring: Bank of America reports 67 percent of small-business owners are planning to hire over the next year. Wells Fargo/Gallup reports lower prospects for hiring, with 26 percent saying they plan to increase the number of jobs at their company over the next year.
The banks’ reports also differ on revenues. Bank of America’s survey, taken in August and September, reports 72 percent of owners expect revenues to rise over the next 12 months. Wells Fargo/Gallup survey, conducted in November, reports 47 percent of owners feel that way.
So why the differences on these points, and with the survey’s bottom-line messages?
Mandel’s answer: politics. He points to the 2016 Presidential election period as influencing small-business owners’ moods, as the state of the economy has figured prominently in campaign rhetoric.