Small businesses in New Jersey and across the country appear to be starting 2016 on a positive note.

Morgan Lane Studios, ThinkStock

Following three consecutive quarters of declines, the latest Wells Fargo/Gallup Small Business Index points to a jump in optimism among merchants.

The Q1 survey, conducted in the middle of January, comes in with an optimism score of 67, a 13-point gain from the last survey conducted in November.

"They're feeling better about their cash flow, balance sheets seem to be a lot stronger overall, and they're a lot more upbeat about future business conditions," said Lou Gallo, Banking Area Manager for New Jersey at Wells Fargo. "Based on the past three quarters, this is positive."

The Index had actually been on the decline since the first quarter of 2015 when it registered a score of 71.

Two-thirds of business owners in the latest survey said they expect cash flow to be very or somewhat good in the next 12 months.

Owners, though, still have a number of challenges that limit their success. The top concern among respondents - attracting customers and finding new business. They also expressed concerns over retaining quality staff and government regulations.

Meanwhile, slowly but surely, more merchants are getting on board with card processing systems that accept chip-enabled debit and credit cards.

Almost half said they are equipped for the change, up from 31 percent in August 2015.

Merchants had until October of last year to get their systems in line. Without the proper equipment, they can be solely responsible for the cost of fraud.

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