Small Business Startup Sentiment Index Reaches 52-Week High

With many small businesses being greatly impacted over the past year, is it possible that would-be business owners could be turned off to the idea? A new survey suggests that this may not be the case as optimism among potential small business buyers continues to climb higher.

Each month, FranchiseInsights compiles the Small Business Startup Sentiment Index based on responses from aspiring and current business owners. The latest survey (which was conducted between March 25th and 31st) found that 69.3% of entrepreneurs agreed with the sentiment that it’s currently a good time to start a business. This figure also includes 32.8% that “strongly agreed” with the statement. The combined result was the highest the Index has reached since February 2020 when it reached 76.4%. Of course, sentiment cratered the following month as the COVID-19 pandemic gripped the nation, leading the Index to fall to 55% — and the “strongly agree” portion plummeting to 16.3% from 36% one month prior. However, it was actually August and November that tied for overall one-year lows at 53.5%.

It also seems that many entrepreneurs are optimistic about conditions improving. Of those surveyed, 57.7% said that they anticipated business conditions to be “better” or “much better” in the next three months. This marks the largest percentage for this response since April of last year when it was believed that the pandemic would be quickly snuffed. On the opposite end, 11.3% expect business conditions to get “worse” or “much worse” over the next quarter. Although that figure represents a year-long low, it’s still a far cry from February 2020 when a mere 2.2% expressed pessimism about the future.

Interestingly, when entrepreneurs were asked how the COVID-19 pandemic had impacted their desire to be small business owners, many reported that it had actually increased their resolve. In March, 38.7% of respondents said the episode had increased their interest in “controlling their own destiny” by owning their own business. The next most popular response was a greater interest in businesses that might be more resistant to such events. As for negative responses, 13% stated that they now have less capital to invest in their business while 8% said that their startup plans are currently on hold as a result of the pandemic.

Commenting on March’s results, FranchiseVentures president Hunter Stokes said, “Business conditions as perceived by aspiring business owners haven’t been better since the pandemic unfolded.” Stokes continued, “The next several months should show a wave of startups based on this data.”

Over the past year, small business owners have demonstrated their resiliency. In turn, this survey suggests that many entrepreneurs are equally as determined and haven’t been dissuaded by recent setbacks. With that, there’s reason to believe that the next wave of small businesses will lead us to a robust economic revival as the nations looks to finally overcome the pandemic.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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