Despite the upheaval of a global health crisis, small business owners are showing their mettle and remaining upbeat about their future, a new survey from JPMorgan Chase shows.
The 11th annual Business Leaders Outlook Survey found that nationwide, more than three-quarters of midsize business leaders and 63 percent of small business leaders remain optimistic about their own performance in the year ahead, even as they continue to face the impacts of the pandemic.
Still, less than half of the small businesses surveyed anticipate revenue and sales growth for the year ahead, down from 60 percent last year. The outlook for midsize businesses is a bit higher at 69 percent.
And Rochester is no different.
“I thought you would be more removed or more insular from this, but from all my colleagues (in Rochester) it sounds like you’ve been dealing with the same kind of problems everyone else has,” said Jim Glassman, head economist for JPMorgan Chase Commercial Banking. “What’s interesting to me, when I look through the regional data, city by city, state by state, I don’t see a lot of difference.”
Glassman acknowledged that in less dense geographies COVID-19 may not be as pervasive, which could account for higher business optimism.
“But I think when it comes to the economic performance of our communities, what’s happened is because of the crisis everybody has responded similarly — asking restaurants and bars and fitness centers to turn out the lights and asking people to stay home,” Glassman said. “No matter where I look I see an echo of very similar trends.”
Other findings from the survey that are echoed here in Rochester include the need to shift and adapt to new realities. Some 84 percent of midsized companies and 72 percent of small businesses have moved some or all of their workforce to remote work in the past year.
Nearly two-thirds of midsized businesses and one-third of small businesses said they have increased cash reserves as a cushion for potential future disruptions, with one-third of small businesses expecting to save more in 2021.
More than half of midsize businesses have increased their usage of online banking and treasury tools, including electronic payments. Small businesses have moved towards contactless payment options, with 23 percent already implementing them and an additional 20 percent expecting to do so this year. More than one in 10 small businesses changed their business model to have 100 percent of sales come from e-commerce in 2020. Twelve percent expect to do so this year.
“I think we were all surprised at how quickly we were able to adapt to the new world without much disruption,” Glassman said. “I don’t think 10 years ago we could have done this. But it’s a testimony to all this innovation that’s been going on.
“And all of us who get to work from home are finding you can actually do more work,” he added. “I know you don’t do that much commuting in Rochester, but a lot of people commute three hours a day. It frees up a lot of time to do other things, including work.”
Some 61 percent of midsize and 47 percent of small businesses said economic uncertainty is their top challenge, but generating sales and revenue growth also remains a key challenge. On the upside, 45 percent of midsized businesses and 34 percent of small businesses expect to increase full-time personnel in the next year. A limited supply of qualified candidates remains the top challenge to hiring for midsized businesses and is increasingly becoming a major concern for small businesses.
In addition to operational shifts, nearly half of businesses surveyed said their core business values have changed since the start of the pandemic. The most common shifts include placing a greater value on their community, relationships with employees and digital solutions for their businesses.
Glassman said the results of the survey fit with what is going on in the equity market.
“In the equity market people have said yeah, it’s disruptive but we’ll get over it,” he explained. “The assumption always was the medical science was going to help. Washington is doing things to help furloughed workers. And businesses are doing pretty well. I think for most people in the equity market the thinking has been look beyond the crisis. We’re going to get it under control shortly and I think that’s what we’re hearing from the business leaders as well.”
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