Leaders of SMBs have mixed outlooks about economic trends in coming year
Six in 10 midsized business leaders expect increased revenue and sales, although these expectations are more tempered than in previous years.
Business leaders, like many economists, have mixed views about what the economy may hold in store in the coming year.
Although the much-anticipated recession has yet to materialize, small- and midsized businesses had to navigate stubborn inflation, banking industry disruptions, geopolitical risks and sustained macroeconomic challenges in 2023. Looking ahead, leaders are evenly divided about economic prospects, with 31% optimistic, 34% pessimistic and 36% neutral, according to JPMorgan Chase’s 2024 Business Leaders Outlook survey.
“Despite the volatility of 2023, it has been encouraging to see the resilience of U.S. businesses and the firm pace of U.S. consumer spending growth that has contributed to the year’s stronger economic picture,” said Ginger Chambless, head of research for JPMorgan Chase Commercial Banking. “Over the last few years, business leaders have not only become adept at managing through tough times and recovering from speedbumps but confident in their ability to manage and lead through crises, given how practiced they’ve become. These learnings will set them up well to weather future uncertainty.”
Six in 10 midsized business leaders expect increased revenue and sales, although these expectations are more tempered than in previous years. Meanwhile, the 69% of small business leaders expecting increased revenue and sales is in line with the highest levels recorded by the survey. Both small and midsized leaders anticipate greater profits (66% and 55%, respectively).
Among other key findings of the survey:
Labor and inflation. Businesses continue to wrestle with many of the same issues they have faced for years, namely labor and inflation, even as they have tried to adapt and address these challenges. More than half of midsized business leaders cite labor-related issues among their most significant challenges. More than one-third of small business leaders report inflation as one of their most significant challenges, along with rising taxes (19%) and the ability to grow sales and revenue (18%).
Artificial intelligence. Although adoption of artificial intelligence tools, such as generative AI and language processing software, is not yet widespread, business leaders are giving them more consideration to support a growing number of functions. Nearly half of midsized businesses currently are using or considering using AI for financial management, accounting, human resources and training purposes, with 46% of small businesses planning to do so.
Innovation economy. Forty-three percent of founders and entrepreneurs are optimistic about the national economy in the year ahead, and half are optimistic about the local or regional economy. Similarly, innovation economy business leaders are bullish on their prospects, with 74% expressing optimism for their company’s performance.
Related: Small biz CEOs worried about economic prospects
“Today’s business leaders are not strangers to the challenges before them and have remained nimble and primed for opportunities, despite continued uncertainty,” said John Simmons, head of middle market banking and specialized industries for JPMorgan Chase Commercial Banking. “The most resilient leaders focus on continuous improvement, iterating with each challenge to make strategic investments in their operations, adopt new technologies and focus on their people to move their business forward.”