Small business may be booming across the country. According to the Wells Fargo/Gallup Small Business Index, smaller firms were slightly more confident in April than they were since the start of the year.
The index, conducted during the first week of April, improved seven points to a positive 16, compared to a reading of positive nine in January and a negative 11 in November. While the index is down from a year ago, the latest monthly value is the third highest since July of 2008. Yet while optimism is growing, most small business owners said attracting customers is the most pressing challenge they face today.
Consumer confidence, home prices bolster small business hopes
Small businesses aren’t the only ones feeling a little more at ease in the current economic climate. Recently, The Conference Board’s index measure of consumer confidence rose to 68.1, which beat analyst expectations in a recent Bloomberg survey, in which economists predicted a reading of 61.
Recent housing price data also indicates small businesses’ hopes may be lifted by consumers upping their spend. Recent February figures for the S&P/Case-Shiller Home Price Indices showed average home prices increased 8.6 percent and 9.3 percent for the 10- and 20-City Composites, respectively, from February 2012. Each city included in the indices posted year-over-year growth for at least two consecutive months.
If consumers are spending, that is good news for small businesses, especially those in construction-related fields.
“The fact that [consumers] feel a little bit wealthier will give them a little more leeway,” Brian Jones, senior U.S. economist at Societe Generale, told Bloomberg. “You’re going to have a spring lull, and growth will re-accelerate in the second half of the year. I do think the labor market is genuinely getting better.”
Cash flow a bright spot for small business
While 48 percent of business owners said cash flow was very good or somewhat good over the past 12 months in the Wells Fargo/Gallup index survey, up from 41 percent in January, 53 percent of owners expect their cash flow to be very or somewhat good over the next 12 months.
Other survey results suggest small businesses may be in the market for financing: 61 percent of business owners said they were comfortable with their debt load.
Financing businesses, like National Funding, provide sound alternatives for small businesses with strong cash flows looking to attract new customers by improving their products and services with equipment leasing, merchant cash advances, and small business loan options.
