Wells Fargo/Gallup Index: Small business owner optimism improves; current
financial situation getting stronger

According to the recent Wells Fargo/Gallup Small Business Index survey, conducted in April, business
owners appear to be regaining their footing, albeit at a measured pace. The report indicated improved
optimism among business owners, driven by more favorable perceptions of their current financial
situation and cash flow.

Concluded April 16, the latest Wells Fargo/Gallup Small Business Index optimism score came in at
negative 11 (-11), a five-point improvement from the previous survey (conducted in January 2010).
Owner optimism has improved 10 points from the survey low of -21 (conducted in July 2009), which
represents an upward trend over the past three quarters. A score of zero indicates that small business
owners, as a group, are neutral – neither optimistic nor pessimistic – about their companies’ situations.
“As consumer and business spending appeared to pick up pace, this bolstered small business owners’
optimism around their current situation,” said Dr. Scott Anderson, Wells Fargo senior economist. “In our
latest survey, we see more small business owners describing their cash flows and current financial
situation as good and higher percentages seeing an increase in revenues over the last 12 months.
However, business owners remain skeptical about the sustainability of this current upturn.”

The Index is the sum of “present situation” and “future expectations” of small business owners for six key
measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and
credit availability. The “present situation” improved seven points from negative 29 (-29) in January 2010
to negative 22 (-22). “Future expectations” declined slightly from 13 to 11.

Index Score: Q2 2010 vs. Q1 2010  

                                                          Overall Index
                                                          Small Business
                                                          Owner Optimism    Present Situation       Future Expectations
Q2 2010
(surveyed April 2010)                            -11                                 -22                                    11
Q1 2010
(surveyed January 2010)                      -16                                 -29                                    13

Of the six key measures in the survey, the following two measures related to the
"present situation" served as main drivers of the Index score during this survey:

Present Situation:
Current Financial Situation – 54 percent rated their company’s current financial
situation as somewhat or very good today, up from 48 percent in Q1 2010
Cash Flow – 42 percent rated their cash flow as somewhat or very good for the past
12 months, up from 39 percent in Q1 2010

About the Small Business Index
For the last 28 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 indicates that
small business owners, as a group, are neutral -- neither optimistic nor pessimistic
 -- about their companies’ situations. Results are based on telephone interviews with
605 small business owners in all 50 United States conducted April 12-16, 2010. The
overall Small Business Index is computed from a formula that scores and sums the
answers to 12 questions— six about the present situation and six about the future.
The overall Index can range from -400 (the most negative score possible) to +400
(the most positive score possible), but in practice takes on a much more limited
range. The margin of sampling error is +/- four percentage points.