Half of small business owners feel current business conditions are good or excellent, according to Capital One data released Tuesday. The Small Business Growth Index is up nine points from this time last year and has reached the highest level reported since spring 2012. Small business owners are feeling optimistic about current conditions as well as future prospects—the majority expect to see conditions improve in the next six months, according to the report.
In spite of their growing optimism, small business owners are hesitant to invest in people, technology and marketing. About two-thirds of small business owners reported no plans to hire, increase spending on marketing or invest in new technologies such as mobile payments in the next six to twelve months. Business owners attributed their hesitation to several factors they expect to impact business: taxes, managing cash flow, keeping up with technology, minimum wage increases, access to capital and immigration reform.
Small business hiring remained mostly unchanged in March, after three months of positive gains, according to Paycheck survey data released Tuesday. The Small Business Jobs Index dropped 0.05 percent from the previous month, representing essentially unchanged small business employment growth year-over-year.
While many small business owners are hesitant to hire and invest, women and millennial entrepreneurs are more encouraged. The Small Business Growth Index reports that 72 percent of millennials (defined as those ages 21 to 35) are optimistic about their financial outlook compared to 53 percent of Generation X and 49 percent of baby boomer respondents. The younger group is also more likely to spend: 42 percent of millennials plan to increase spending on marketing in the next six to twelve months.
“It’s encouraging to see more small businesses feeling optimistic about their performance and future prospects, particularly women and younger business owners who represent increasingly significant segments impacting our local and national economies,” said Buck Stinson, head of small business card at Capital One.
Capital One’s Small Business Growth Index Survey collects data from a national sample of 500 for-profit small businesses, which are defined as those with a total annual revenue less than $10 million. The Paychex/IHS Small Business Jobs Index, released monthly, is based on aggregated data from approximately 350,000 small businesses with fewer than 50 employees across the U.S.