Are business owners truly enveloped in all of this doom and gloom? Ensnared by worry and strife? The simple truth is no, they’re really not. The overarching view is not indicative of how things truly are on the ground. The truth is, businesses are optimistic and there’s plenty of data to prove it.
Let’s take a look at how folks are really feeling both on the state and national levels.
Right around the start of the year, JPMorgan Chase published their Business Leaders Outlook survey, which gathers data from more than 1,800 executives from middle market companies from around the country. These companies have annual revenues between $20 million and $500 million annually and include various industry categories.
The survey’s findings showed that, generally, business leaders are feeling pretty good right now, especially about factors that come closer to home.
Chase surveyors noted that, “Businesses are most optimistic about their own prospects, as the economic expansion stretches to a full decade and they’ve had a full year to digest the corporate tax cut. In all, 84 percent of midsize businesses and 74 percent of small businesses are optimistic about their company performance.”
“Businesses are being more cautious as they focus their growth plans on what they can control,” said Jim Glassman, senior economist at JPMorgan Chase. “They’re investing back into their business and preparing for disruptive forces like emerging technologies (such as a technology that shakes up an industry or is a ground-breaking product that creates a completely new industry, etc.).”
As things move a little further away from home, businesses are correspondingly a little less optimistic. 73 percent of midsize companies and 55 percent of small remain optimistic about the national economy. Stepping back a little further reveals that 39 percent of midsize businesses and 38 percent of small businesses are optimistic about the global economic outlook. This could have a lot to do with many of the headline-grabbing international finance topics we’ve all been seeing for the last year or so, such as trade tensions and tariffs. So, it’s no surprise that business owners feel better about what they can actually see, their own areas of operation.
Additional findings from the survey described that:
Companies are Investing: Nearly all businesses, 91 percent of small and midsize companies, plan to maintain or increase their capital expenditures.
Profit Projections Look Good: 81 percent of midsize companies expect their revenue/sales to increase in 2019 and 74 percent expect higher profits. Among small businesses, 60 percent expect revenue/sales growth and 58 percent expect to see higher profits.
Jobs are On Offer: Two-thirds (66 percent) of midsize companies plan to hire more full-time personnel. Small businesses are more conservative. Just over one-third (36 percent) plan to add full-timers.
Compensation is Climbing: 80 percent of midsize companies plan to increase compensation in the next year. 41 percent of small businesses will increase compensation.
Challenge – Finding Candidates: Midsize businesses rank the limited supply of talent as their #1 challenge. More than half (54 percent) of midsize businesses report being very or extremely concerned. Small business are concerned but to a lesser degree: 28 percent are very or extremely concerned.
Challenge – Keeping an Eye on Tech: 75 percent of midsize companies and 52 percent of small ones have taken actions to prepare for disruptive tech changes. Examples include proactive counter measures, designating a person to identify threats and opportunities, and forming contingency plans.
Much like the national picture, Indiana’s business leaders report fairly strong sentiment for how their companies are currently fairing. Recent findings from PNC Bank’s survey of small and middle-market businesses owners described business optimism as “running at historic highs in all categories evaluated.”
PNC commissioned Washington DC-based market research firm Artemis Strategy Group to conduct over 150 interviews with small and mid-sized companies. Their findings reflected that, in many ways, Indiana companies are even more enthusiastic than our national peers.
Brighter than Ever: Over half (54 percent) of respondents are optimistic about their own companies. This marks a new high for PNC Bank’s survey.
The Nation’s Okay Too: Just under half (48 percent) of respondents describe their outlook for the national economy as optimistic.
Orders are Coming In: Expectations for increased sales are the highest on record for the survey at 65 percent.
Business Looks Good: Over half (56 percent) of business leaders expect increased profits.
Wages are Growing: 41 percent of companies expect to increase wages (another new high for the survey), while the number planning to decrease workers’ wages is just one percent.
We’re Hiring: 28 percent of Indiana business leaders plan to add full-time employees in the next six months. Half of those companies reported that business growth is driving the hiring.
We’re Training: 71 percent of Indiana business leaders say they already have taken one or more actions to retain existing or to attract new employees. Examples include increasing wages/salaries, boosting benefits, and offering or increasing bonuses, and allowing more flexible work arrangements.
Regarding the reasons why business leaders are riding such a high wave of optimism, the two reports largely attribute things to continued economic growth, the recent regulatory policy changes, and tax reforms.
JPMorgan Chase wrote that the optimism has been caused by current economic expansion as it stretches to a full decade and companies feel the benefits provided by last year’s corporate tax cut.
PNC Bank wrote that one in three business leaders (35 percent) view the potential impacts of the tax cuts as positive for their bottom line. Also, familiarity, in general, with the Tax Cuts and Jobs Act of 2017 is growing among business leaders.
An additional source, NFIB (National Federation of Independent Business), a Nashville, TN-based small business association, reported that the optimism was caused by “smart policy changes such as tax reform and deregulation that have created a strong economy and real results for small business.”
So, there’s a consensus there, at the very least, that businesses are feeling encouraged by policy changes and are moving forward with a little more gusto. One could presume this will, with a little luck, help add to our economy’s already rolling momentum by helping to inspire new opportunities among owners moving forward.
