Small business owners indicated declining optimism in the latest quarterly Wells Fargo/Gallup Small Business Index, with an overall Index score of 106.

That marks the seventh consecutive quarter in which the score has topped 100, although it is 23 points lower than last quarter’s all-time high of 129. The first quarter 2019 survey was conducted January 9–15.

Along with a drop in the overall score, the number of business owners who indicated optimism about their present financial situation dropped to 46, down 13 points from the previous quarter. In addition, optimism about their business’ future decreased 10 points to 60.

This coincides with decreasing company revenues, with 45% percent of owners saying revenues increased (down 10 percentage points from last quarter) and 25% indicating a decrease (up 8 percentage points from the previous quarter). Optimism about revenue in the next 12 months also fell by 7 percentage points, with fewer business owners saying they expect revenue to increase in 2019.

“Today’s business owners are very in tune with changes in the economy, government policy and many other factors that can affect their ventures,” said Andy Rowe, Wells Fargo head of Customer Segments. “They are seeing these factors come into play and are predictably exercising measured caution as they plan for the coming year.”

The survey also asked how prepared business owners are for a future economic downturn. More than three quarters (77%) said they were somewhat prepared or very prepared for such an event, compared with 23% who said they were not very prepared or not at all prepared. Also, when asked if 2019 would be a year of economic prosperity or difficulty, 67% indicated prosperity and 29% indicated difficulty.

Proprietors who owned their businesses during the 2008 recession were asked to compare their preparedness now to that point in time. The number of owners saying they were more prepared now was 75%. 14% said they were less prepared. In addition, when asked what their greatest lesson was in the decade since the 2008 recession, the most frequent response was conservative capital management and frugality (19%), followed by monitoring cash flow (12%) and good planning (9%).

“With the various economic indicators we’ve seen, the decrease in revenues and outside factors like the government shutdown, business owners are predictably more cautious than in 2018,” said Mark Vitner, Wells Fargo senior economist. “With that said, their responses around preparedness and their continued sense that 2019 will be a prosperous year economically indicate a sense of caution as opposed to a prediction of an economic slump.”

Hiring and attracting new business highlighted as top challenges

For the fourth consecutive quarter, a high of 16% of business owners indicated hiring and retaining staff is their top challenge; attracting new business rose to nearly the same level as a top challenge, with 15% citing it.

Other challenges cited include financial stability/cash flow (9%) and taxes (8%), both of which continue to be top issues for small business owners.