Review of the Q3 Small Business Index/Gallup Poll
Since August 2003, the Gallup Small Business Index has surveyed small business owners on current perceptions and future predictions of their business financial situation.
The overall Index can range from -400 (the lowest score possible) to +400 (the highest score possible). The highest reading was in the fourth quarter of 2006 at a positive 114 and the lowest reading was in the third quarter of 2010 at a negative 28.
Optimism among small business owners continues to slowly rise from its lowest point in 2010. However, it is still far below the position it was in before the 2008 recession.
Q3 Proves Promising for Small Business Owners
Since the 2008-2009 recession and the index’s lowest reading of -28 in 2010, small business owners have finally reached their highest level of optimism in six years. Small business owners have struggled through ups and downs in the stock market, even as the economy has tried to recover from the recession. In the quarter 3 survey, conducted July 7-11, the overall Index score is up +49 from +45 in January 2014.
Forty-three percent of small business owners reported that their company’s revenues increased in the past 12 months, compared to 36 percent in Q2 2014. Fifty-five percent of owners surveyed reported a somewhat or very good cash flow over the past 12 months. This is the highest percentage since Q1 2008 and up from 50 percent in Q2 2014. Also up slightly, within the past 12 months, is the ease of getting credit for business funding. Thirty-two percent of owners say it has been somewhat or very easy to obtain credit in the last 12 months, and 38 percent expect that credit will be somewhat or very easy to acquire in the next 12 months.
While the Q3 Index showed slight progress, the future outlook for small business owners in the July survey dropped from a +33 in Q2 2014 to a +31.
Challenges for Small Business Owners
Although small business owners are slowly gaining hope, they report that attracting customers and finding business continues to be the “most important challenge.” Tied for second are the difficulties imposed by federal regulations, the financial stability of their company, and the economy.
In the July survey, small business owners were asked about specific challenges they face when attracting and retaining customers. Fourteen percent of owners comment on traditional concerns, regarding marketing, advertising, outreach and the promotion of their business to prospective clients. As much as 13 percent of owners note their competitors, including larger corporations and the internet. Ten percent say their biggest challenge is having money to cover costs to run the business and invest into product improvement. Other owners have the most difficulty with other aspects, including the economy, hiring and retaining qualified staff and seasonal/weather-related issues.
Impact of Technology in Small Businesses
Business owners were asked about their use of technology, in the July survey. Many of their responses showed that mobile technology and social media are running and marketing their businesses. All small business owners surveyed utilize social media networking sites to help grow their businesses through customer interaction, marketing and promotion, building an online presence and advertising, and 59 percent of owners- compared to 54 percent in 2011- have a website for their business. Roughly four in 10 owners use a tablet and nearly one-third are using cloud-based computing software to manage their businesses.
Seventy-two percent of business owners use a desktop or laptop to do their banking, while 40 percent use their mobile devices. Amidst the owners who use mobile banking, 44 percent said they use their smartphone/tablet to monitor cash flow for their business; 16 percent use it for mobile deposits; and 14 percent use it to pay bills online. The top reasons for those owners who don’t use mobile banking are security concerns and their preference for face-to-face banking.
While the financial situation among small business owners seems to be promising, owners seem uncertain about the expectations for the future. Perhaps the gradual increase in cash flow, revenue and access to credit will allow small business owners to improve in the areas they feel are lacking.