“The outlook is healthy, especially for those with a strong, forward-looking strategy and backed by a good team,” said Lester Pataki, managing director for New Jersey at JPMorgan Chase’s commercial bank. “We’re seeing clients putting capital to work in equipment and real estate to support organic growth, as well as to make acquisitions to capture both current and future growth opportunities.”
Businesses continue to bet on themselves, the survey revealed, with nearly 70% of middle-market companies and 62% of small businesses expecting to grow sales this year despite a less robust economic environment.
Companies are also ramping up investments in technology to better reach new customers and prepare for the future.
Midsize businesses, in particular, are deploying new cloud computing initiatives (73%), data-driven targeted marketing (50%) and application programming interfaces (46%) in 2020, while 89% of midsize companies and 61% of small businesses have taken actions to boost cybersecurity, such as purchasing cyber insurance, creating contingency plans and designating individuals and teams to identify threats and opportunities.
Companies nationwide are also planning to improve benefits, flexible work arrangements and compensation packages to increase hiring and the retention of talent, which, for the second consecutive year, midsize businesses rank as the No. 1 business challenge.
More than 30% of small businesses also report that they are extremely concerned about the candidate supply, up from 28% last year.
“The labor pool is tight, especially for skilled workers,” Pataki said. “We haven’t heard from a single client that isn’t concerned about the ability to scale due to labor costs.
“Our clients are also watching the impact of minimum wage changes, especially for companies that need a strong pool of lower skilled workers, and many are working to adapt their business model to prepare for these changes.”
Still, 55% of midsize businesses and 39% of small businesses expect to increase full-time employees over the next year. Small businesses also expect a jump in part-time employment, with 38% planning to hire, up 7 percentage points from 2019.
Across the U.S., optimism regarding the global economy is down for midsize companies — 24% compared with 39% in 2019 — and steady at 40% for small businesses.
“Companies that do business overseas are concerned and actively watching tariffs,” Pataki said.
Still, despite geopolitical and trade-related concerns, 14% of the midsize businesses with sales outside the U.S. plan to establish international sales or operations within the next three years.
“Businesses are becoming used to a new normal as the pace of economic expansion naturally settles down,” said Jim Glassman, senior economist at JPMorgan Chase. “But it’s important to note that slowing economic growth isn’t a sign of weakness, and many of the concerns business leaders have point toward an economy that’s running at its full potential.”
More than 1,800 business leaders participated in the Q4 survey, including at small businesses with annual revenues between $100,000 and $20 million and middle market companies with annual revenues between $20 million and $500 million.
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