New Wells Fargo survey: small business owner optimism continues to edge higher

Businesses anticipate improved revenues and job growth in 2011

SAN FRANCISCO - February 9, 2011

Small business owners showed growing confidence in the economic recovery with increased optimism for the second consecutive quarter, according to the most recent Wells Fargo/Gallup Small Business Index survey conducted January 13-19, 2011. Measuring business owner optimism across the nation, the latest Index score rose another 16 points this quarter, lifting out of negative territory to reach 12. The Index has gained 40 points since July 2010, the largest two-quarter gain in optimism recorded since the inception of the survey in August 2003.

“Small businesses are feeling much better about this economic recovery than they did two quarters ago,” said Dr. Scott Anderson, Wells Fargo senior economist. “These gains in optimism exceed the improvement we saw between August 2003 and March 2004, when the last economic recovery gathered some momentum and stronger job growth ensued. It appears the change is driven by healthy gains in demand from consumers and businesses, which are leading to improvements in small businesses revenues and cash flows.”

The Index is the sum of “present situation” and “future expectations” of business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability. Looking forward, business owners expect improvements in their financial situation, revenues, jobs and access to credit over the next 12 months. Of these measures, they are most optimistic about increased revenues, with 54 percent expecting an increase of a lot or a little, up from 44 percent in Q4 2010.

“The latest results demonstrate a return to positive territory for the Index -- and an important change in trajectory,” said Doug Case, Wells Fargo small business segment manager. “We are seeing solid improvement from both the present situation and future expectation components of the Index. The increased optimism is encouraging and we find that many business owners remain cautiously optimistic -- they’re keeping their doors open and looking for new business opportunities.”

Looking back, present situation and future expectations scores show year-over-year improvements of 19 and nine points respectively. Since its inception in 2003, the Index has reached a high of 114 in the fourth quarter of 2006 and a low of negative 28 (-28) in the third quarter of 2010.

Index Scores: Q1 2010 – Q1 2011

Overall Index Score Present Situation Future Expectations
Q1 2011 (surveyed January 2011) 12 -10 22
Q4 2010 (surveyed November 2010) -4 -19 15
Q3 2010 (surveyed July 2010) -28 -26 -2
Q2 2010 (surveyed April 2010) -11 -22 11
Q1 2010 (surveyed January 2010) -16 -29 13

The following key measures served as the main drivers of the Index score during this survey period:

Future Expectations

  • Financial Situation – 65 percent of small business owners expect their companies’ financial situation to be somewhat or very good, up from 59 percent in Q4 2010.
  • Revenues – 54 percent expect revenues to increase a little or a lot, up from 44 percent in Q4 2010.
  • Jobs – 23 percent expect their employee headcount to increase a little or a lot, up from 18 percent in Q4 2010.
  • Credit access – 36 percent expect credit to be somewhat or very difficult to obtain, down from 42 percent in Q4 2010.

Present Situation

  • Cash Flow – 33 percent rated their cash flow as somewhat or very poor over the past 12 months, down from 38 percent in Q4 2010.
  • Jobs – 25 percent said the number of jobs at their company decreased a little or a lot, down from 30 percent in Q4 2010.

About the Small Business Index
Since August 2003, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on current and future perceptions of their business financial situation. The Index consists of two dimensions: 1) Owners’ ratings of the current situation of their businesses and, 2) Owners’ ratings of how they expect their businesses to perform over the next 12 months. Results are based on telephone interviews with 603 small business owners in all 50 United States conducted January 13-19. The overall Small Business Index is computed using a formula that scores and sums the answers to 12 questions — six about the present situation and six about the future. An Index score of zero indicates that small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies’ situations. The overall Index can range from -400 (the most negative score possible) to +400 (the most positive score possible), but in practice spans a much more limited range. The margin of sampling error is +/- four percentage points.

About Gallup
For more than 70 years, Gallup has been a recognized leader in the measurement and analysis of people’s attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup’s current activities consist largely of providing marketing and management research, advisory services and education to the world’s largest corporations and institutions.

About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet ( and, and other distribution channels across North America and internationally. With approximately 280,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 19 on Fortune’s 2009 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

Wells Fargo is America’s #1 small business lender (2009 Community Reinvestment Act government data) and a leading lender to women- and diverse-owned businesses. With the nation’s largest network of retail banking stores, and an award-winning online Business Insight Series ( including videos, webcasts and articles, Wells Fargo provides business owners with timely advice and information to educate and help them succeed financially. For more information, or to speak with a Wells Fargo banker, visit or call the National Business Banking Center at 1-800-CALL-WELLS.

Note: Complete survey results available upon request.