America's small business owners are the most optimistic since July 2008, according
to the latest findings from the Wells Fargo/Gallup Small Business survey.

The survey’s index now stands at positive 15 for January, compared to minus 3 in
October 2011 and following two previous Index readings of zero (neither optimistic
 nor pessimistic). Its “future expectations” component (forward looking 12 months)
rose to positive 21 in January, an increase of 13 points from the survey's last
reading, which occurred in October 2011.

Driving the increase was a more bullish sentiment across several categories
tracked by the survey:
• Revenues -- 49 percent expect revenues to increase a lot or a little, up
  from 37 percent in Q4 2011
• Overall financial situation -- 63 percent expect their company's financial
  situation to be very or somewhat good over the next 12 months, up from 55
  percent in Q4 2011
• Hiring -- 22 percent expect the number of jobs at their company to increase
  a lot or a little, up from 15 percent in Q4 2011; 8 percent expect the number
  of jobs at their company to decrease a lot or a little, down from 13 percent
  in Q4 2011
• Cash flow -- 53 percent expect their cash flow to be very or somewhat good,
  up from 48 percent in Q4 2011
• Credit access -- 27 percent expect credit to be very or somewhat easy to
  obtain, up from 22 percent in Q4 2011; 38 percent expect credit to be very
  or somewhat difficult to obtain, down from 43 percent in Q4 2011

In addition to its future expectations component, the index includes a present
situation component (looking back 12 months), which improved to minus 6 in
January, up from minus 11 in Q4, 2011 and the best reading in this component
in three years. Driving this improvement was an increase in business owners
who experienced increased revenues (33 percent), ease of accessing credit
(25 percent) and increased capital spending (24 percent) over the past 12 months.
 

"January's increase in optimism signals that small business owners are seeing a
brighter future," says Doug Case, Wells Fargo's small business segment manager.
"While this economy still presents challenges for many business owners, we are
encouraged by expectations for improved revenues, financial situation and cash
flow, which have the potential to drive job growth."

More small business owners expect to add new employees (22 percent) than expect
to let them go (8 percent) over the next 12 months, an improvement over the
previous survey readings. This quarter's 14 percentage point hiring/firing
difference (those who expect to hire versus fire employees) is the largest since
January 2008 at the start of the financial crisis. In October, the hiring/firing
difference was only 2 percentage points, with 15 percent expecting to add new
employees and 13 percent expecting to let them go.

More than half of the survey's small business owners (52 percent) said they hired
employees in the past 12 months, which is little changed from the 51 percent
reported in November 2010. However, of this group, more business owners say they
have hired as many employees as needed (65 percent, compared to 48 percent in Nov.
 2010) versus those who have hired fewer than needed (29 percent, compared to 42
percent in Nov. 2010), an indication of more stable operating environments.

While business owners indicate plans to hire in the next 12 months, they
demonstrate some concern around hiring today. Only 15 percent said they are
currently looking for new employees. Those who are not looking to hire employees
today (85 percent) were asked why not. Half of all business owners surveyed said
that as a general rule, they find it very difficult (21 percent) or somewhat
difficult (32 percent) to find the right qualified employees for their business.
And, in the event they can't afford to hire new employees, owners say they most
often turn to their spouse (21 percent), a friend (16 percent), their children
(15 percent), or a relative other than child or spouse (11 percent) for unpaid
help.