Small business owners in the US are the “most optimistic since July 2008,” reporting improved confidence in terms of revenue, recruitment, access to credit and cash flow, according to recent survey by Wells Fargo.

The Wells Fargo Gallup Small Business Index survey for January now stands at +15, which is a substantial increase from -3 in October, and follows two previous index readings of zero.

The notion that small business owners are growing in confidence is of considerable relevance to the wealth management industry because, despite their size, they can present an array of opportunities for financial advisors in light of their potential for wealth creation. 

For example, a survey by Securian Financial Group in December revealed that, approximately, just half of small business owners were working with financial advisors at the time, leaving many business owners as good potential prospects unaccounted for. The Wells Fargo small business index survey, which demonstrates a “more bullish” outlook across a number of categories, therefore underlines a significant opportunity for financial advisors.

Overall, sentiment with regards to the next 12 months soared to +21 in January, which is a 13-point increase since the survey’s previous reading in October last year. 

Moreover, almost half (49 per cent) of respondents expect revenues to rise “a lot or a little,” up 12 percentage points from the 37 per cent reading in the final quarter of 2011.

Similarly, 63 per cent anticipate that their company’s overall financial situation will be “very or somewhat good over the next 12 months,” compared to 55 per cent previously.

In terms of recruitment, 22 per cent of those surveyed predict that the number of new posts within their firms will increase “a lot or a little,” which is a rise of 7 percentage points from Q4 2011. Conversely, 8 per cent predict the number of jobs to dwindle - although this is still an improvement from last year’s 13 per cent during Q4.

Meanwhile, over half of respondents (53 per cent) expect their cash flow to be “very or somewhat good,” which is a modest 5 percentage point increase from 48 per cent in the last four months of 2011, and improved confidence is also apparent in terms of credit accessibility, of which 27 per cent of those surveyed foresee as being “very or somewhat easy to obtain” - up from 22 per cent in Q4 2011.

On the other hand, a greater proportion (38 per cent) expect credit to be “very or somewhat difficult to obtain.” This finding is, however, an improvement from the survey’s previous result of 43 per cent.

In addition to the future expectations component, the index included a "present situation component" to reflect sentiment over the past year, and posts an improved reading of -6 in January, up from -11 in Q4 2011, which is “the best reading in this component in three years,” Wells Fargo said.

Wells Fargo has attributed this boost in confidence to growing numbers of business owners having seen higher revenues (33 per cent), ease of accessing credit (25 per cent) and increased capital spending (24 per cent) during the past year.

“January’s increase in optimism signals that small business owners are seeing a brighter future,” said Doug Case, Wells Fargo’s small business segment manager.

“While this economy still presents challenges for many business owners, we are encouraged by expectations for improved revenues, financial situation and cash flow, which have the potential to drive job growth.”

The survey, which took place from 9 January to 13 January, was based on telephone interviews with 600 small business owners in all 50 US states.