According to results from the 2016 JPMorgan Chase Business Leaders Outlook report, executives from middle market businesses and small businesses have positive expectations for the performance of their companies over the next 12 months, at 70% and 69% respectively.
But their perceptions of the economy as a whole are varied, especially globally with only 10% of middle market executives and 27% of small business executives expressing global optimism.
“While business leaders admittedly see challenges overseas, they continue to see opportunities at home and anticipate positive growth in international markets over the next few years,” said Jim Glassman, senior economist at JPMorgan Chase.
While 70% of middle market businesses are optimistic about their own company’s performance, expecting their revenue/sales to increase this year (65%), they are decidedly less so the farther they get from home:
The top challenges facing businesses in 2016 are revenue/sales growth (74%), named by the most respondents in the history of the survey. The retail industry was even higher at 86%. Limited supply of talent (40%), especially in the construction (63%) and services (50%) industries and managing labor costs (40%) were also noted challenges.
Despite challenges and overall global pessimism, businesses nevertheless project strong international growth for their companies. Among the 60% who are globally active, seven out of 10 (70%) expect their overseas sales to increase in the next five years.
“The challenges facing middle market businesses, especially those related to hiring talent and managing costs are indications of growing pains,” said John Simmons, head of Middle Market Banking & Specialized Industries, Commercial Banking, Chase. “It is a positive sign that even with concerns about the global economy, their growth expectations remain strong.”
On the small business side, 69% are optimistic about their own company’s performance, with optimism on the economy strongest closer to home, which is consistent with sentiment from previous years:
Fifty-eight percent of small business plan to obtain financing this year, higher than the 52% reported in 2015. The top reasons for using the proceeds are buying and repairing equipment (19%), purchasing inventory (18%), expansions (15%) and software and technology (15%).
The top challenges facing small businesses for 2016 are growing revenue/sales (48%), uncertainty of economic conditions (33%) and taxes (28%).
“The challenges they are facing are certainly significant, yet not out of the ordinary for small businesses,” said Jennifer Piepszak, CEO of Business Banking for Chase. “Their general eagerness to seek financing is a strong sign that they are readying for near- and long-term growth.”
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