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More small business owners in the Coastal Empire are feeling positive about their current situation, according to a recent nationwide business poll, and even Savannah’s smaller enterprises are more upbeat as the economy slowly improves.
According to the quarterly Wells Fargo/Gallup Small Business Index, the overall index score increased to plus 49, up two points from April and up 15 points from the previous year. This is the index’s highest point since 2008.
“The poll does indicate that small business owners are more optimistic than they’ve been, really, in six years,” said Jenny Gentry, Wells Fargo’s market president for Savannah. “We’re making some significant progress.”
Gentry said this is playing out locally, too. She said Wells Fargo’s lending activity to small businesses — with revenues of less than $2 million — had increased by 50 percent over the year. Lending to mid-size business, meanwhile, increased 65 percent.
“Revenues are up, they’re getting more optimistic about obtaining credit and we’re seeing increased lending across the board,” she said.
The Wells Fargo/Gallup Small Business Index is a survey of small business owners on current and future perceptions of their business situation. The poll, conducted since 2003, is based on interviews with about 600 small business owners across the U.S.
Future expectations, a gauge of how confident an owner feels about his or her cash flow, financial situation and revenue over the next year, sank slightly from the last quarter to plus 31, but it’s still 10 points higher than the previous year.
“Small businesses still have some concerns. I think marketing and advertising was one of the top concerns, keeping good quality team members, government regulation and the effects of health care reform,” said Gentry. “And I do hear that a lot more in Savannah, more than what was indicated in the national poll.”
Many businesses that made it through the recession had to get much leaner and, as a result, now need to spend money to replace outdated or obsolete equipment — while others are trying to increase efficiency.
“We have a small manufacturer that’s one of our clients who instead of outsourcing part of his product line, he bought a piece of equipment that we financed and brought it in, which in turn helped him with quality control and reduced his production time and expense,” she said.
Gentry said there has been some expansion in the market, but it is on a much smaller scale and more cautious than before.
Sean Mabey, director of small business strategy for the southeast, said many businesses are focusing not just on credit but cash flow.
“Credit is just that one piece of it, but it’s not the whole pie,” said Mabey. “There’s a new business started every six seconds; that’s a lot of new businesses and a lot of existing businesses. The only two things they have in common is they’re in this economy and they need cash flow, so we try to make sure our bankers are focused on how to help them be successful.”
According to the survey, cash flow has increased over the year, with 55 percent of business owners saying their cash flow has been very or somewhat good. About 32 percent of owners reported it had been very or somewhat easy to obtain credit in the last year.
Gentry said many small business owners have learned a tremendous amount from the last five years and are ready to use that knowledge to grow and expand.
“They’ve weathered the storm, they’ve become very efficient and, because of that, it’s all come back around,” said Gentry.