Small and midsize U.S. business leaders remain confident in their companies and resourceful in their approaches to confronting macroeconomic challenges that have created growing pains over the last year, according to JPMorgan Chase’s 2022 Business Leaders Outlook Survey, which was released Wednesday morning.
(Note: The survey was taken during November — or before the Omicron variant led to an incredible surge of COVID-19 cases.)
At the time of the survey, the majority of business leaders was feeling upbeat: 83% of midsize and 71% of small businesses were optimistic about their own performance in 2022, up from 77% and 63% one year ago.
Business leaders also have increased optimism around their industry performance and local, national and global economic outlooks compared to the start of 2021. Despite continued uncertainty posed by COVID-19, businesses are setting their expectations high, with 81% of midsize businesses and 63% of small businesses anticipating revenue and sales growth in the year ahead. In line with these expansion plans, more than 4 in 10 of those surveyed expected credit needs to increase in 2022, representing the highest percentages recorded in the last five years.
“Businesses have been key accelerators of the continued economic recovery through their resolve and ingenuity in finding new ways to deliver products and services to their customers,” said Jim Glassman, head economist, JPMorgan Chase Commercial Banking. “They now have a stronger sense of how to remain competitive in the current economic landscape, which should allow them to build on last year’s momentum.”
More than half (53%) of midsize businesses are operating at least at the same capacity as they were before the COVID-19 pandemic, with nearly one-third (31%) now running at a greater capacity than their pre-pandemic levels, indicating that some businesses have leaned into the disruption and continued to grow. Seventy percent have also seen profits return to or exceed pre-pandemic levels. The return to pre-pandemic productivity is on track to continue, as 9 out of 10 midsize businesses expect to grow in 2022, with the most common growth drivers including expansion into new markets or geographies, innovation or diversification in products and services and increased consumer demand.
Navigating economic & operational challenges
The achievements of the last year have not come easy, as businesses of all sizes have had to navigate an uncertain and obstacle-ridden operating environment. Below are the Top 3 challenges cited by small and midsize business leaders.
In response to today’s challenges, small and midsize businesses have made changes to their business models, including:
- Supply chain workarounds: To alleviate supply chain disruptions, nearly two-thirds (65%) of midsize businesses have used strategic stockpiling and over half (51%) have added suppliers from new geographies. A significant number have also allocated more funds to cover increased costs related to moving products (48%), changed materials or manufacturing processes (32%) and replaced or stopped doing business with certain suppliers (30%).
- Employee incentives: In response to recruiting and hiring concerns, a staggering 81% of midsize businesses and 38% of small businesses have or plan to increase wages. Flexibility is also a key consideration for many business leaders, with 45% of midsize businesses having or planning to give employees flexibility on where they work and 40% of small businesses already offering or planning to offer employees more flexible hours. To retain staff, small businesses have boosted their employee benefits, such as health insurance (61%) and 401(k) programs (37%).
- New consumer channels: While small businesses are concerned about how shifting consumer preferences due to COVID-19 will impact them, they are increasingly taking action to reach consumers via digital channels. Nearly one-quarter (24%) of small businesses have implemented more contactless payment options, and 22% have increased selling on social media platforms. In the year ahead, 19% expect to move to a nearly 100% e-commerce model, up from 12% one year ago.
“Businesses today are eager to grow but are having to navigate the reality of not being able to fill open roles quickly enough and dealing with disruptions in their supply chain that are slowing them down,” said John Simmons, head of middle market banking & specialized industries, JPMorgan Chase Commercial Banking. “At the same time, it’s encouraging to see companies’ adaptability and the pivots they’ve made to push through major pain points. I’m inspired every day by the grit and ingenuity of America’s business leaders, who have continued to shine throughout the pressures of the past 18-plus months.”
Survey methodology: The survey was conducted online from Nov. 11-29 for small businesses (annual revenues between $100,000 and $20 million) and from Nov. 2-22 for middle-market companies (annual revenues between $20 million and $500 million). In total, more than 2,600 business leaders in various industries across the U.S. participated in the survey.