With rising oil prices and constant talk of a recession, it’s no surprise small business owner optimism is waning. According to the recent Wells Fargo/Gallup Small Business Index survey, more than one-third of small business owners said that their personal financial situation as a whole is getting worse.
The survey found that the economy is affecting small business owners’ spending and savings habits. Half of the business owners surveyed said they’ve postponed a major purchase in the past three months, and nearly as many (44%) said they’ve reduced the amount of money they’ve deposited savings, checking or a CD. Thirty-one percent said they have reduced the amount they have contributed to a retirement account.
“In this economy, I’ve needed to cut back on both my personal and business spending, says Laine Caspi, owner of Parents of Invention in Granada Hills, CA. “At times, I need to forgo personal purchases so that I can put more money toward business expenses.”
Small business owners also show concerns about not having enough money for the future. Seventy-five percent have concerns about paying for gas. More than half (51%) are worried they will not have enough money for the next 12 months regular medical and dental expenses, and almost half (46%) fear they will not have enough money to pay for unforeseen medical emergencies.
“It has been a challenging year for small businesses, requiring business owners to rethink their expense and cash flow priorities, says Rebecca Macieira-Kaufmann, head of the small business segment, Wells Fargo. “Times of economic downturn often showcase the resiliency of small business owners. What’s critical now, as in any economic environment, is that business owners maintain strong financial management practices and plan for the future. Our bankers are ready to assist with financial solutions and advice.”
For the last 20 quarters, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on their current and future perceptions of the business environment. The quarterly surveys include timely hot topic questions relevant to small business owners. Results are based on telephone interviews with 600 small business owners nationwide conducted April 2-16, 2008. The margin of sampling error is 4 percentage points.