Key Findings


Small business confidence rises
amid strong cash flow

Small business health is strong and stable, with 62% reporting they are in good health, up one percentage point from 61% in Q4 of 2017. More than a third (37%) of small business owners describe their business health as very good.

The rise in this quarter’s national Index score is reflected in a more confident small business operational environment. The business health outlook is strong among those in the professional services industry (75%), businesses with more than 20 employees (76%), and those in the South (67%) and West (64%).

Percentage of businesses
comfortable with
their cash flow

Businesses owned by women were less likely to report that their business was in good health (54%), compared to men-owned businesses (65%). Women were also more likely to say the health of their business was poor (15%) compared to men-owned businesses (9%).

Businesses with 20 to 99 employees are the most sound, with 76% reporting good health. Small businesses with four employees or fewer are less secure than the 62% average, with 57% of employers reporting good health.

Professional services reported the strongest health of any sector at 75%. The retail sector is facing the most pressure, with only 51% of businesses surveyed reporting good health.

A strong majority of small business owners (79%) feel comfortable with their cash flow, unchanged from last quarter. The 10% of businesses reporting to be in poor health are not comfortable with their cash flow (68% not comfortable), while businesses in good health are nearly universally comfortable with their cash flow (91% comfortable).

As with business health, women-owned businesses are also less likely to feel comfortable with their cash flow (67%), consistent with 2017. Those that plan to invest in their business are more likely to feel comfortable with their cash flow versus those that plan to save (89% and 77%, respectively).

In addition to a positive cash flow outlook, the number of companies that say they are spending more time dealing with licensing, compliance, and other government requirements fell six percentage points to 18% (from 24% last quarter).


Small businesses have high expectations
but remain cautious

Attitude vs. Actions

Small business owners are feeling enthusiastic in the New Year, but still plan on spending conservatively in 2018. Nine out of every ten (90%) entrepreneurs said they anticipate a good year. The optimism is broadly shared across demographic groups—93% of minority-owned businesses and 86% of women-owned businesses anticipate a good year.

Small businesses expect higher earnings for a third quarter in a row, with 61% expecting an increase in future revenue one year from now, up four percentage points from last quarter. That optimism is expected to play out in a growth in hiring. Small business employment expectations are up for the second quarter in a row, with more small businesses (32%) planning to increase staff in the next year compared to last quarter (27%).

Even though small businesses anticipate a strong year, they plan to spend profits judiciously. More than half (51%) of small businesses plan to save profits, compared to 39% of small businesses who plan on investing these funds.

We want to be everywhere. The goal is to be within driving distance of every American, and for that to happen we need to invest.

San Francisco, California

Preparing for the future is tough as a farmer. We save as much as we can and try to diversify our products. That’s kept us going this long.

Family farm
Clear Lake, Iowa

Savers vs. Investors:
By the Numbers

When it comes to those who plan on spending, the top areas for investment are staff-related: pay for employees (53%), training for themselves and employees (49%), and hiring new staff (45%).

Those who are planning to invest are the most optimistic about increased revenue, with four in five reporting they expect an increase in future revenue (80%). Minority-owned businesses are also expecting a bump, with just under three-quarters (71%) reporting they anticipate increased revenue this year.

The U.S. has boom and bust cycles that are hard to plan for. We are always planning for the worst, but hoping for the best. That means having savings, but also investing to find new customers.

Lalit Chordia
President and CEO
Thar Process Inc.
Pittsburgh, Pennsylvania


A strong National Outlook is Leading the Way

The largest change in small business sentiment this quarter came regarding the national economic scene, where small business perception of the country’s economic outlook has warmed significantly. A majority of business owners are feeling positive about the U.S. economy for the first time in the Index’s history, suggesting the national economic outlook is driving overall sentiment.

More than half (55%) of business owners see the national economy in good health, up 17 percentage points from 38% in Q4 of 2017. Optimism concerning the economic health of the country is shared equally among men (56%) and women (54%). The rosier national outlook also marks the first time in the history of the survey that small business owners (46%) have had a stronger perception of the country’s economic path than their local economy, where the view is less positive.

Belief that tax reform will have a positive impact on business health appears to be strongly correlated with positive attitudes about the national economy. Among small business owners that believe tax reform will help the economy, 69% say the U.S. economy is in good shape and 35% say very good shape.

The shared favorable outlook on the nation’s economic direction did not spill over to small business owners’ backyards, where sentiment fell for the first time in the history of this Index. Only 46% of small businesses view their local economy’s health as good. Last quarter, 48% of those surveyed were positive on the local economy versus only 39% for the national economy. Perception of local economy diverges by gender. Men-owned businesses are more confident, with 48% viewing their local economy as good compared to 40% for women-owned businesses.

If people feel good about the [national] economy it does well. People spend.

Frame’s Pest Control, Inc.
Toledo, Ohio

The state as a whole has gone through harder times of late, but it’s a beautiful community of hardworking people.

Floral Alchemy
Milwaukee, Wisconsin