This year's Barometer also discovered businesses owned by or that employ veterans tend to perform better than the norm when it comes to metrics such as past performance, recent growth and increased sales. Owners who hire veterans say it's the right thing to do and that employees with military backgrounds know how to work as part of a team and have personal traits that are valuable to operating a business, including self-discipline and knowing the importance of being on time.

"With our network of agencies operating as small businesses across the country, we are constantly pursuing a deeper understanding of Main Street and how local entrepreneurs contribute to their communities' success," said John O'Donnell, Allstate's senior vice president of agency operations. "We echo the optimism felt by small business owners, and as a veteran myself, it's gratifying to see this particular group of entrepreneurs succeed."

The 2017 Allstate/USA TODAY Small Business Barometer produced an overall score of 58 for the country's small business sector, which rates as "solid" on the Barometer's 0-100 scale. The score is a slight decrease from 2016's release (61), with the two most significant changes coming in optimism and commodities – up 13 and down 37 points respectively, compared to last year's Barometer. Overall scores in 25 major markets nationwide – ranging from 56 (solid) in Los Angeles to 63 (strong) in Cleveland and Nashville – reflect the national outcome.

Barometer scores are the result of an extensive analysis of public data – including from the U.S. Census Bureau, the Bureau of Labor Statistics, the Federal Reserve and the Federal Register – and responses to survey questions posed to small business owners, to evaluate their outlook in eight categories: capital, commodities, customers, innovation, labor, regulation, technology and optimism.

The Barometer's proprietary data model weighs the scores of each of the eight indicators to determine a final ranking based on the following ranges: excellent (81-100), strong (61-80), solid (41-60), fair (21-40) and challenged (0-20).

KEY FINDINGS

Optimism and innovation are surging: Nearly two-thirds (64 percent) of small business owners say there has never been a better time to own a small business.

• Innovation is becoming a key part of any small business. Half of all owners experimented with new business practices to provide their customers with new goods or services.

• Nine in 10 respondents (91 percent) believe the benefits of owning a small business outweigh the challenges.

• Sixty-four percent say their businesses are doing well and 72 percent are optimistic that they'll do well in the coming year.

• The Small Business Barometer shows optimism to be the highest of all metrics, with a score of 92. It's especially high among African Americans (100), Hispanics (98) and those under 50 (100).

• Among key demographic groups, business owners under 50, veterans and African Americans report higher optimism and better business performance.

The small business economy is stronger than in late 2015: More than half (55 percent) of small business owners say their business' revenue has increased in the past year.

• Nearly half (49 percent) of small business owners say their businesses have grown more in the past three months than in the same period last year, while only 16 percent say it has grown less than the same period last year.

• Forty-two percent of small business owners say their sales have been better than usual in the past three months.

• Businesses are growing, as 34 percent of small businesses have hired a new employee in the past three months and 42 percent are currently hiring or expect to be hiring in the coming three months.

Despite increased optimism, small business owners still face persistent stress: Three quarters of owners report some or a great deal of stress – about the same as in the 2016 release.

• Managing business responsibilities and demands ranks as the biggest contributor to that stress.

• Family pressures and health problems for those in the family also contribute to this stress.

• Within their businesses, obtaining new clients or customers is the greatest challenge facing small business owners, as it was in the 2016 release.

• Given the challenges of attracting new customers, nearly four in five owners take special steps to retain existing or repeat customers, including maintaining regular contact, offering discounts and sending cards or notes.

• Other obstacles include dealing with sales and marketing, maintaining a work-life-balance, and managing cash flow.

• Among the demographic groups surveyed, 84 percent of Hispanic owners report some or a great deal of stress, which is higher than any other group.

The costs of owning a business are rising: The Barometer's commodities score plunged to 25, compared to 62 in the 2016 release.

• More than half (51 percent) of owners say the cost of materials and equipment they need is higher this year than last.

• In response to rising equipment costs, a quarter of owners have increased their own prices this year.

Veterans offer crucial benefits to small businesses: Businesses owned by or that employ veterans tend to do better than the norm on a number of metrics, including past business performance, optimism for the future, hiring, recent growth and increased sales.

• Sixteen percent of small business owners currently serve as or are veterans, while 45 percent of businesses employ a current or former service member.

• Seventy percent of veteran-owned businesses report doing well, compared to 64 percent of the overall survey.

• Only one-third of businesses have a formal or informal policy that gives hiring preference to veterans – but those policies are highly effective when put in place.

Younger business owners adapt and innovate more: There's a widening gap between business owners under 50 and 50 or older.

• Younger owners are more likely to report that their businesses are doing well, more likely to be optimistic about the future and more than twice as likely to be hiring.

• Younger business owners are almost four times more likely to have taken steps to attract investors or business partners.

• Almost twice as many younger owners conduct a portion of their sales and advertising online.

• These younger owners are satisfied with the regulatory environment, whereas older owners consider regulation burdensome.

Female business owners face unique challenges: While there are few differences on most metrics, women deal with family matters more often than their male peers.

• Women report more stress from family pressures (57 percent) and family health (49 percent) than men (48 percent and 43 percent, respectively).

• Despite being similar on attributes like size and length of time in business, women's businesses tend to make less income: 41 percent make an annual income of less than $100,000, compared to only 21 percent of men's businesses.

• Just 10 percent of women's small businesses make more than $1 million in annual income, compared to 24 percent of men's small businesses making that amount.

• Women also rate higher than men the ability to work flexible hours and work from home as benefits of owning a small business.