Positive predictions for profitability…but what about AI?
Every quarter we publish the results of our Vistage CEO Confidence Index: a survey of SME business leaders from which we determine sentiment about business prospects, expansion plans and the overall economy.
Despite the continued gloominess of the current economic climate, our report for Q2 2023 reveals some green shoots of positivity. Click here to download the full report – or read on for a snapshot of the most recent results.
Overall confidence declines
While overall CEO confidence reached its highest point in a year in Q1 2023, our CEO Confidence Index score has fallen from 104.7 in Q1 to 100.1 in Q2. This decline correlates with respondents’ views of the overall economic situation.
Just 12% of respondents believe that overall economic conditions in the UK & Ireland have improved compared with a year ago, while 60% say that they have worsened. More than half of our respondents put this down to raised interest rates, which are impacting their business performance.
The outlook for the next 12 months is more positive, though, with 30% believing that economic conditions will have improved by this time, and 43% stating that they will be about the same. However, with the Bank of England having raised interest rates in 15 consecutive meetings since 2021 and consumer price inflation remaining high, it remains to be seen how this will impact on economic conditions going forward.
A positive outlook for business growth
Despite our respondents’ negative sentiments about the current economic situation, things are more positive when it comes to their own business growth.
91% say they believe their firm’s sales revenues will either improve or stay the same over the coming 12 months, with just 8% believing they will get worse. While confidence in profitability isn’t quite so high, the picture is still positive. 39% expect profitability to improve in the next year, while 33% predict it will be about the same and 26% believe it will worsen.
When it comes to business expenditure and talent, the signs are just as positive. 54% plan to increase their employee numbers, and not a single respondent plans to reduce workforce benefits. 96% have no plans to reduce training and development investment, while 91% have no intention of reducing their sales and marketing spend.
One area that is less of a priority for many, it seems, is AI.
Are SMEs investing enough in AI?
AI is growing at an incredibly rapid rate. According to recent statistics:
- The current value of the UK AI market is over £16.9bn – a figure that could rise to £803.7bn by 2035.
- In 2022, AI contributed £3.7bn to the UK economy.
- The number of AI companies in the UK has grown by 688% over the last decade.
- One in six UK companies has embraced at least one form of AI technology.
However, these statistics also reveal that just 15% of small companies and 33% of medium-sized companies have welcomed at least one form of AI technology. Our Q2 2023 CEO Confidence Index results also suggest that AI is not a priority for many.
37% of those surveyed are not currently testing or using AI tech. Of those who are, however, the biggest uses are in operations (46%) and sales & marketing (45%).
While much has been made in the media of the potential downsides of AI in the workplace, our respondents seem positive about the technology’s impact on staff. Only 6% of those surveyed believe that AI applications could replace human employees, while only 13% state that it will reduce employee numbers.
The relatively low levels of AI usage amongst SMEs could simply be a results of the economic climate, however. As Vistage Managing Director (UK) Steve McNulty says, “New technologies and innovations have taken a back seat as leaders have focused on financial solvency, however, we anticipate that this will change over the coming year”.
For more insights from our Q2 2023 CEO Confidence Index, download our full report here.