Despite economic uncertainty, small businesses gaining optimism about revenue growth, expansion plans [WSJ/Vistage July 2020]

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  • The WSJ/Vistage Small Business CEO Confidence Index increased for the third month reaching 75.0 in July
  • Twice as many small businesses expect increased revenues compared to those that expect decreases
  • Sentiment about the future of the economy stalls in the face of uncertainty due to surges of COVID-19 cases
  • Nearly 3 in 10 small businesses report local surges of COVID-19 cases

The confidence of small business CEOs improved for the third consecutive month driven by improving projections for their business in the next 12 months.

This is according to a July survey conducted by Vistage in partnership with the Wall Street Journal. Dr. Richard Curtin, a researcher at the University of Michigan who analyzed the data, states “Although the data current reflect the much hoped for “V” recession, that prognosis assumes the impact of the pandemic on the economy continues to moderate and is finally extinguished by a vaccine. That outlook is unlikely as the recent resurgences have demonstrated.”

In the July survey, small business leaders continued to hold negative views of recent economic conditions—88% reported that the economy is worse than a year ago.

In addition the proportion of small businesses that expect improvements has reversed the gains from June, with 41% reporting expectations for economic improvement in the next year. This may indicate that small businesses had renewed uncertainty in the economy due to the surge in cases in some areas. Dr. Curtin speculates that “given the recent surge in the spread of COVID-19, added restrictions on firms are likely to worsen the year-ahead economic outlook.”

Despite economic uncertainty, CEOs expect revenues to increase

What drove the increase in CEO confidence in the July survey were increasingly positive views of CEOs about the growth of their businesses. While 45% of CEOs surveyed expect increased profits over the next 12 months, over half (52%) expect increased revenues – more than double the number that expect declines. Cash reserves are improving too – 54% of CEOs surveyed reported having cash reserves of six months or greater to support their businesses through recovery. These reserves will be needed, as 68% of CEOs reported their belief that it will take the U.S. economy six months or longer to start recovery.

Expansion plans continue to rise

In July, 46% of small business CEOs reported plans to expand their workforces compared to 40% in June. On the other end of the spectrum, 15% of CEOs surveyed plan to decrease their workforces. Of those small businesses planning workforce reductions, nearly two-thirds (64%) will make them in the next three months.

Recovery at a plateau

During the past month, the increase in COVID-19 cases has been a looming shadow for small businesses, both in terms of the impact to their customers and employees. While nearly three in 10 businesses reported being impacted by local surges, 35% report cases close to home – in their customer, employee and vendor communities.

In addition, back-to-school plans may impact the workforces of small businesses, and GDP numbers may continue to stall recovery. With recovery at a plateau, the confidence of small businesses will likely stall as well.

The July WSJ/Vistage Small Business CEO survey was conducted July 6 – 13, 2020 and gathered 713 responses from CEOs and other leaders of small businesses. Our August survey, in the field August 3 – 10, will continue to measure how small businesses are changing their workplaces as a result of the pandemic.

Download the July report for the complete analysis

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About the Author: Anne Petrik

As Vice President of Research for Vistage, Anne Petrik is instrumental in the creation of original thought leadership designed to inform the decision-making of CEOs of small and midsize businesses. These perspectives — shared through repo

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