To fully appreciate the upbeat nature of a conversation on the economy with Kent McClun, Wells Fargo”™s president for Connecticut and its small-business advocate for New York and Connecticut, know that the bank”™s in-house metric for small-business confidence tanked in the third quarter of 2010 at 28 points below zero. Its high four years earlier ”” the fourth quarter of 2006 ”” had been 114.
The third-quarter 2014 number ”” recently released and the result of 603 interviews with small-business owners in 50 states ”” is 49.
“We”™re certainly headed in the right direction,” McClun said.
Wells Fargo conducted the poll with Gallup Inc. Since 2003, they have produced the Wells Fargo/Gallup Small Business Index. The index also charts “present situation” and pegs a number to it.
The small-business present situation for the third quarter of this year was rated in the survey at 18; in the second quarter it bottomed at 2.
McClun cited active-growth industries that include accounting, law, professional services and health care. “Also, there”™s a big emphasis on green energy ”” green replacing old technology,” he said. “A rising tide lifts all boats.”
Wells Fargo has committed $100 billion nationally to small-business lending between now and 2018. “We”™re committed to 2018,” McClun said. “But I”™d like to lend $100 billion by 2015. We”™re certainly here for the small business to help them grow and be successful.”
The bank”™s initiatives in that direction include WellsFargoWorks.com, which opened May 1 and can be used by noncustomers.
McClun said, “It provides resources, guidance and services for small businesses. Things you might not think of can be critical: picking a payroll provider, even hiring an attorney and an accountant and when to expand.” Asked if the feedback has been positive, he said, “Very much so.”
Small-business owners are feeling better about their current business financial situation, according to the survey, with 62 percent rating it as very or somewhat good, up from 57 percent in the second quarter.
“There”™s been an obvious increase in business activity as the economy continues to improve,” McClun said. “We see a deleveraging on debt with an increased awareness of debt and cash flow. If you add that in with the improving economy, there are a lot of factors that play into business optimism.” He said that while the survey results were national, “We see those national results playing out locally.
“When you think about small-business persons, generally they”™re optimists,” McClun said. “Optimism plays a lot into the business equation. And right now customers seem to be optimistic. If someone is looking specifically for reasons to be optimistic, the economy is up, hiring is up and sales are starting to increase. We”™re seeing good indicators across the board.”
When the survey asked business owners to identify their most important challenges, 13 percent cited attracting new customers and generating new sales, 11 percent said government regulations, 11 percent said financial stability of their business and 11 percent cited the economy in general.
McClun said that, counter to the “tight money” stories of the recession, “Wells Fargo always had money to lend. The difference now is that people feel more confident. Certainly, some underwriting standards have been tweaked, but really what we see now is more people are taking advantage of the loans.
“I think business persons are more comfortable and confident with what”™s coming. They”™re figuring out their expenses and finding they have greater clarity on expenses. There is more clarity on health care and how that is playing out. As a result they are more confident to borrow.”
He said “health care is popping” as a leader in seeking money to grow.
The survey also cited factors that contributed to the overall improvement, including:
Ӣ More business owners reported revenues have increased, with 43 percent indicating revenues were up in the past 12 months compared with 36 percent in April.
Ӣ Cash flow over the past 12 months hit a six-year high.
Ӣ 32 percent of small-business owners said it was very or somewhat easy to obtain credit in the past 12 months.
Other survey findings included:
”¢ Small-business owners have become increasingly likely to report having a business website ”” now at 59 percent compared with 54 percent in 2011.
Ӣ Nearly four in 10 use a tablet and are using cloud-based computing software to run their businesses.
Ӣ Social networking sites are used in a variety of ways to help grow businesses, including connecting with customers (37 percent), marketing and promotion (34 percent), building an online reputation (34 percent) and advertising (33 percent).
Ӣ Seventy-two percent of business owners use a desktop or laptop to do their banking. And 40 percent use their mobile device to conduct banking related to their small business.
