Despite continuing challenges, the majority of small business owners enjoy running
their business.

The vast majority of California's small business owners (85 percent) are concerned
that the economy may experience a double-dip recession, according to the latest
Citibank small business survey. At the same time, 74 percent of survey respondents
say they are very or somewhat prepared for another downturn, signaling that many
California entrepreneurs have adjusted their businesses and finances to get through
any additional economic stumbles.

According to the survey, 67 percent of the state's business owners say they have
changed the way they run their business -- with 62 percent indicating the way they
do business has forever changed. Among the adjustments, respondents cited debt
reduction (41 percent), increasing cash reserves (39 percent), hiring freezes (34
percent) and delaying plans for expansion (34 percent). When asked what factors
allowed them to weather the recession, California's small business owners listed
long-term client base/relationships (61 percent), effectively managing expenses
(53 percent), and strength of marketing (28 percent).

"As one of the largest sources of jobs in California, small businesses will play
a key rolein any economic recovery," said Rebecca Macieira-Kaufmann, President of
Citibank California. "Our latest survey's findings are encouraging, showing that
many of the state's small businesses have taken significant action to operate
prudently in the current environment and at the same time prepare for growth."

To improve or grow their business this year, business owners say they plan to work
longer hours themselves (61 percent); increase marketing (53 percent); get better
pricing from suppliers, vendors, or landlords (46 percent); and increase employee
productivity/get by with fewer employees (39 percent).

Realistic but Passionate
Mirroring findings of previous surveys, a majority of California's small business
owners (78 percent) rate current business conditions as only fair or poor, and only
28 percent diagnosed their business as better off today than a year ago. Outlook for
the next 12 months appears split, with 51 percent saying they expect their business
to improve in that time and 49 percent believing conditions will worsen or remain
about the same.

Respondents cited higher taxes (52 percent), a declining demand for their products
and services (43 percent), tighter business regulations (38 percent), and the cost
of health insurance (33 percent) as the primary challenges to running their business
today.

Yet despite the challenging outlook, small business owners' passion for their work
continues to shine through in Citibank's survey.

Eighty-one percent of California's small business owners say they like or love running
their own business, and 78 percent say they would start their business again even if
they knew then what they know now about the challenges they would face. Additionally,
60 percent said they would recommend entrepreneurship as a career to their children.

"In the face of uncertain conditions, California's business owners remain passionate
about their business and unwavering in their career choice," added Macieira-Kaufmann.
"Our survey once again reveals the spirit, passion and commitment of California's
entrepreneurs."

Small business hiring plans remain tepid, with 78 percent of business owners planning
to reduce (8 percent) or keep the same number of employees (70 percent) in the next 12
months. Small business owners say they would increase hiring if they experienced an
increase in sales; yet nine in 10 say they would need to see sales increase for at
least two quarters in a row before hiring new employees. Other hiring drivers for small
business owners include more certainty that the economy is recovering (54 percent) and
a reduction in payroll taxes (37 percent).