Small Business Owner Optimism ...

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Small Business Owner Optimism Reaches Four-Year Record High

SB Informer
Tuesday, January 16, 2007; 05:37 AM

Small business owner optimism reached new heights during Q4 2006 as the Wells Fargo/Gallup Small Business Index set a record high Index score of 114. This is up four points from Q3 2006 and is the highest level for the Index since its inception in August 2003, when it stood at 69. The Index is calculated based on a nationwide survey of small business owners conducted by the Gallup Organization and sponsored by Wells Fargo, America's number one lender to small businesses.

"While many economists are forecasting a weaker economic environment for 2007, small business owners are, according to the results, expressing no signs of an economic downturn," said Dr. Scott Anderson, senior economist at Wells Fargo. "These optimistic findings indicate expectations for a rebound in activity this year, as the forces that have been inhibiting growth prospects -- such as rising energy prices and interest rates, and stagnant wage growth -- reverse course and begin supporting future demand."

Looking ahead, many small business owners are optimistic about future revenue growth. Of the respondents surveyed, 63 percent expect revenues to increase and 75 percent expect their cash flow to be in good standing in 2007.

"Small business strength and optimism is reflected in our overall lending to small businesses as well as increased sales of our Business Services Packages," said Rebecca Macieira-Kaufmann, executive vice president and head of Wells Fargo's small business segment. "Based on the latest CRA data our small business lending grew by more than 30 percent year-over-year. Our Business Services Package sales increased by over 50 percent. This growth shows that small business owners are looking for both capital and for a full suite of financial services to better support their needs."

The Index is comprised of two dimensions: 1) Owners' ratings of the current situation of their businesses and, 2) Owners' future expectations regarding how their businesses will perform over the next 12 months. Small business owners' assessment of their current business situation is at its highest since the Index began -- reaching 49, reflecting a one-point increase from September 2006. Small business owners indicate even more optimism about how their businesses will perform in 2007 with the Future Expectations Dimension reaching 65 in Q4 2006, equaling its March 2005 high point. The overall Index score is the sum of these two dimensions with the largest improvement coming from the Future Expectations dimension.

About the Small Business Index

Since the third quarter of 2003, the quarterly Wells Fargo/Gallup Small Business Index has surveyed small business owners on their perceptions of current conditions and future expectations relating to financial situation, revenues, cash flow, capital spending, number of jobs and credit availability. Results are based on telephone interviews with approximately 600 small business owners nationwide conducted November 9, 2006 through November 29, 2006. The margin of sampling error is +/-4 percentage points.

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $483 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 million customers from more than 6,100 stores and the internet (wellsfargo.com ) across North America and internationally. Wells Fargo Bank, N.A. has the highest possible credit rating, "Aaa," from Moody's Investors Service and the highest credit rating given to a U.S. bank, "AA+," from Standard & Poor's Ratings Services.

Providing financial products and services to more than one million businesses with annual sales up to $20 million in all 50 states, Puerto Rico and Canada, Wells Fargo is the #1 lender to small businesses in the United States in total dollar volume according to the most recent CRA data (2005).

The second largest national SBA lender in dollars, Wells Fargo is an SBA Preferred Lender in 30 states and the District of Columbia, and originated 4,937 loans for $578 million in 2006. Its diverse business services programs provide outreach and education to women, African American, Latino, and Asian business owners about financial services. Since 1995, Wells Fargo has loaned more than $33 billion to women and diverse business owners. For more information, please visit us at
http://www.wellsfargo.com/biz.

About the Gallup Organization

For more than 60 years, the Gallup Organization 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.