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Small Business Confidence Reaches Highest Point in Five Years

Staff Report

Monday, November 13th, 2017

Small business optimism continues to rise as a majority of business owners are reporting increased sales and improved business conditions since earlier this year. Capital One's latest Small Business Growth Index, which polled 500 small business owners in August, found 60 percent of small business owners feel current business conditions are good or excellent, and 37 percent reported being in a better financial position than one year ago – up from 31 percent since earlier this year.

Meanwhile, despite the growing optimism, challenges persist for many small businesses. Taxes (45 percent), managing cash flow (42 percent) and keeping up with technology (32 percent) are top concerns for business owners in the coming year.

"It is always encouraging to see a positive shift in small business sentiment, considering the great impact they have on our local and national economies," said Celia Edwards Karam, head of small business bank at Capital One. "At the same time, it's clear business owners need better tools to help them address and manage challenges like cash flow and technology. We remain focused on understanding these challenges and delivering experiences designed to help businesses succeed and grow."

Following are key themes uncovered by the fall 2017 Small Business Growth Index. Additional findings, including historical data and breakdowns, can be found here.

  • Overall confidence is up: Capital One's Small Business Confidence Score tracking overall small business sentiment on the economy, hiring plans, future financial positions and recent sales, has reached its highest point since 2012.

  • Revenues are increasing: Nearly half (47 percent) of SBOs reported increased sales in the past six months, up 10 points from earlier this year.

  • Yet hiring plans remain flat: Plans for growth remain steady, with 25 percent of businesses planning to hire in the next six months – down two points from earlier this year. Seventy-two percent of SBOs said increases in minimum wage are not impacting business growth.

  • Concerns about cash flow and tech on the rise: The number of SBOs concerned with cash flow management increased 11 points from fall 2016, while the number of SBOs concerned with keeping up with technology increased seven points from fall 2016.

  • Taxes and other regulations are top of mind: Nearly a quarter (24 percent) of business owners report loosened federal and state regulations have had a positive impact on growth. Meanwhile, 37 percent of SBOs say the Affordable Care Act has had a negative impact on business growth, and 30 percent say tax rates and laws have negatively impacted their business.