“I’m ready to celebrate,” Matthew Clough said, reflecting back on a year that began with no guarantees.

Eleven months ago, Clough founded Stone + Cloth, a socially-motivated backpack company based out of Downtown Los Angeles. Every bag is made in the US and each one purchased supports a child’s education in Tanzania.

“Tomorrow we’re launching a new product," He reported. "Next year I’ll be hiring so I can focus entirely on building the brand.”

Though inspiring, Clough’s story of good fortune feels all too rare these days. Statistically speaking, that’s precisely what it is.

In fact, the job market for small businesses is bleaker than ever, according to the most recent Wells Fargo/Gallup Small Business Index survey. Instead of expanding business, twenty-one percent of small company owners expect to decrease staff in the next six months – the most ever recorded since the Wells Fargo/Gallup collaboration report first published in August 2003. An additional sixty-one percent of owners expect no change in workforce numbers.

Clough stands with the seventeen percent of small-business owners predicting growth in the New Year – a three percent drop since Gallup’s Q3 findings.

“This is an eye-opening drop in optimism…among small business owners,” said Marc Bernstein, head of Small Business at Wells Fargo.

At one point things were looking up. “There was considerable improvement in small business owners' hiring expectations during much of 2012, prior to the recent November plunge,” according to Gallup. “Now expectations have deteriorated to tie the low recorded in 2008.”

Gallup highlighted a number of key drivers at play in the widespread uncertainty. Business owners admitted doubts about future financial security, cash flow, and capital spending (Forty percent of owners indicated a decrease — up from thirty-four percent from Q3) were listed as possible factors.

An overview projection of the present situation is a decrease in jobs and revenue for small businesses nationwide. In the past twelve months, approximately one in four owners lowered company headcount — the largest percentage since 2010. Forty-four percent reported a drop in revenue. This figure has risen significantly from July 2012.

According to Gallup, there may be more disappointment ahead for the already feeble job market:

• Over the next twelve months, Gallop’s findings predict “owners will be adding fewer net jobs to their companies than at any time during the worst of the 2008-2009 recession.”
• One in five small business owners (21%) expect to decrease employment over the next 12 months – the largest percentage of small businesses expecting to reduce jobs since the survey’s 2003 inception.

“I just feel lucky,” Clough remarked on his success.

Perhaps it’s luck, but it's more than that. Clough's company is surely listening to the current market. Tomorrow, Stone + Cloth launches product just in time for the final holiday push: A simpler bag that will sell at a lower price point.

“I’m not worried,” he says. “I’m hopeful for the future and have reasons to be excited about it.”