After a strong start to the fall, small business optimism declined during October. According to the monthly WSJ/Vistage Small Business CEO Survey, both optimism for the future and positive sentiment about current conditions dropped sharply.
In September, about 47 percent of CEOs and owners felt that the economy had improved compared to a year ago and about 30 percent expected conditions to improve in the next 12 months. In October, however, the numbers dropped roughly 11 and 9 percentage points respectively. The number of small businesses who expect conditions to worsen – 27 percent – was larger than the 21 percent who expressed optimism, indicating a majority of business owners are anticipating a difficult time ahead.
Optimism about sales revenue also dropped. In September, 72 percent of small businesses anticipated an increase in revenue during the next year. That number dropped 4 percentage points in October. When separated by industry, sales optimism in retail trade dropped almost 13 percentage points. Retailers may have been disproportionately affected during the month.
Month of federal budget panic
The results were undoubtedly affected by the federal government shutdown, which was ongoing at the time of the survey. Small businesses were affected by the halting of federal loans, decline in consumer confidence and closing of national parks and monuments. Furthermore, fears of a government default on loans were widespread earlier in the month, with some anticipating devastating economic effects. Coupled with uncertainty about the shutdown, anxiety over budget talks was a likely cause of lower confidence levels.
But despite the decrease, sales confidence remained relatively high in October. Sixty-eight percent of owners said they expect increased revenue during the next 12 months, 23 percent expected it to stay about the same and only 8 percent anticipated a decrease. While businesses expressed significant pessimism about future economic conditions, sentiment about future sales stayed about the same. Businesses may just have been worried about the deadline for the federal budget, and the impact it could have on their industry.
With budget talks now delayed for a few more months, owners are turning back to their work and focusing on improving their businesses. Retailers, especially, after being affected by an October dip in consumer confidence, are shaping up for the holiday season. Small business owners hoping to make investments should consider small business loans from an alternative lender. Unlike banks and federal lenders, which have imposed limitations since the shutdown. National Funding continues to offer many financing services for owners in need.