CEO confidence falls amid coronavirus concerns
Whether you believe we are on the verge of a global pandemic or that the coronavirus (COVID-19) is an over-hyped flu, you can’t deny the ripple effect on society. We see impacts on different areas of life: the human impact, the financial impact and the business impact.
The consequences for businesses have extended beyond companies experiencing the disruption in supply chain from China or other affected areas of the world. Events globally are being cancelled, local grocery store shelves that once contained hand sanitizer and toilet paper are bare, and some people are choosing to replace handshakes and hugs with elbow bumps and air high fives. That’s downplaying the effect on various industries and the hit our retirement accounts might have taken due to historical performances in the stock market.
The ripple effect of COVID-19 is now being felt at some level by all industries and regions, and especially by small and midsize businesses. Concern is on the rise with each new case, briefing and news headline. In our Q1 2020 Vistage CEO Confidence Index survey conducted March 2 – 9, 2020, we captured feedback from 1,695 CEOs and other leaders of small and midsize businesses.
Early analysis of the data shows that overall confidence of CEOs has fallen since a turn upwards last quarter, with the Index dropping below the low recorded in Q3 2019. All factors that comprise the Index have fallen since last quarter, and more significant is that the proportion of respondents who expect conditions to worsen has increased. More CEOs believe the economy will worsen, more CEOs expect decreased revenues, and more CEOs are cutting back investment spending in the year ahead.
- More than twice as many CEOs expect the economy to worsen (41%) rather than improve (18%) in the year ahead.
- While 62% of CEOs expect increased revenues in the next 12 months, the 13% who expect declining revenues is the highest proportion since Q4 2009.
- Expansion plans are on the decline and an increasing number of CEOs plan to cut back on investments (15%) and reduce the size of their workforces (9%).
COVID-19 is the external factor driving these declines, generating some level of concern among small and midsize business leaders. In our survey, 4 in 10 CEOs are moderately or extremely concerned. Just 7% are not concerned at all.
Level of concern about COVID-19 among small and midsize business CEOs
Source: Q1 2020 Vistage CEO Confidence Index
Where is the biggest impact? While originally it might have been in the supply chain, travel now tops the list of impacts for SMBs. Whether for meetings, supplier visits, inspections, client visits, conferences or trade shows, travel is one thing nearly all businesses have in common. Many companies are choosing to defer travel altogether, while others have proceeded with business as usual and are keeping vigilant on the latest recommendations from the Centers for Disease Control, the World Health Organization and other agencies.
- 61% of CEOs report travel, events and conferences have been disrupted.
- 46% of CEOs report that supply chains have been disrupted.
- 39% of CEOs report impacts from market changes.
- 30% of CEOs report impacts on customers and sales.
We will continue to monitor the impact of coronavirus on small and midsize businesses. Regardless of your personal level of concern and if your business has experienced consequences, it’s critical to prioritize the human element, and keep your families, employees, customers and communities safe, both physically and psychologically. Whether in response to this incident or preparing for any future events, allowing remote working, investing in technology that streamlines your business, and continuing to collaborate and hold meetings will help your company sustain business as usual.