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Report: Small Business Owner Optimism Lowest in Five Years

December 18, 2008

Wells Fargo –According to the recent Wells Fargo/Gallup Small Business Index surveyed in November, small business owners’ optimism fell to its lowest level since the survey’s inception in 2003. The score now stands at 10, a 35-point drop since last quarter. The Index has been declining since mid-2007.

“The Index hit a record low last month, which appears to be the result of a sharp decline in consumer and business spending,” said Dr. Scott Anderson, senior economist at Wells Fargo. “Despite the significant decrease in overall optimism, four of every five small business owners said they did not perceive credit as difficult to obtain. It appears that the Fed’s injections of capital and liquidity in the banking system may be having some effect on maintaining credit flow.”

The Index dropped a total of 104 points from its highest score of 114, recorded in December 2006, and 73 points since January of this year. The Index is the sum of “current situation” and “future expectations” of small business owners for six key measures, including financial situation, cash flow, revenues, capital allocation, job hiring, and credit availability. The “present situation” score fell to three this quarter — down 16 points from the last survey conducted in July — and “future expectations” dropped to seven, down 19 points from July. Five out of the six measures contributed to the Index’s overall drop, with “cash flow” showing little change (both for present situation and future expectations).

Overall Index

Small Business Owner

Date___________Optimism/ Present/ Future Expectations
Q1 2008 (January)…..83…..38…..45
Q2 2008 (April)…..48…..18…..30
Q3 2008 (July)…..45…..19…..26
Q4 2008 (November)…..10…..3…..7

About the Small Business Index

For the last 22 quarters, 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. An Index score of zero reflects that an equal number of small business owners are optimistic and pessimistic about their companies’ situation. Results are based on telephone interviews with 605 small business owners nationwide conducted November 5- 17, 2008. The margin of sampling error is +/- 4 percentage points.

About the Gallup Organization

For more than 70 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.

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $622 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”

Wells Fargo is America’s #1 small business lender in total dollar volume according to the most recent Community Reinvestment Act data (2007) and the #1 SBA 7a national bank lender in total dollar volume. Wells Fargo has loaned more than $37 billion to women, African American, Latino and Asian business owners since 1995. For more information, speak with a Wells Fargo banker, visit wellsfargo.com/biz or call the National Business Banking Center at 1-800-CALL-WELLS.

Note: Survey results available upon request.

  
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Discuss this article

Ben December 18, 2008

This is the first survey where +/-40% would not improve the results much. These figures are appalling.

cc33 December 18, 2008

Optimism is about the future and CEOs look ahead and see no positive signs. No leadership, no breakthroughs, no unity. Everyone is in defensive mode and waiting for everyone else to move. It would be encouraging if some of Oregon’s best corporate heads hit the airwaves and began putting some of this gloom into persepctive. Many company sectors are growing. All is not bad.

The sound of me December 18, 2008

Perception is reality in the marketplace.

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