Businesses Concerned Despite Growth, Dun & Bradstreet Study Says
As we move into 2016, many companies are looking ahead with mixed emotions. Although surveys and statistics provide some indication that conditions are improving in the economy, many business owners continue to worry about the future. A survey conducted by Dun & Bradstreet and Pepperdine University Private Capital Access Index sheds some light on upcoming market conditions, expectations of business owners, and what lies ahead.
Growth, But Hindered
One of the key findings from the survey points are that small and medium sized enterprise owners are feeling less than confident about 2016. Only 46 percent of these business owners believe their companies will grow in the coming year. More so, 56 percent believe the current economic conditions are limiting their potential growth.
Economic conditions are not as clearly defined as they have been in previous years. Many businesses are impacted by this on numerous fronts. When small and medium businesses consider their 2016 outlook, many will take a step back from ordering large inventories or onboarding new talent. According to the U.S. Department of Commerce, Bureau of Economic Analysis, gross domestic product in the U.S. grew two percent in the third quarter of 2015 and nearly four percent in the quarter prior. Additionally, personal income is up 0.3 percent in November of 2015 indicating consumers have slightly more disposable income available to them.
These factors, among others, are impacting businesses and their expectations moving forward. Businesses see the back and forth that is occurring in various sectors of the economy as worrisome. Unlike previous recessions where numbers were more steadily growing in a favorable direction, this year's growth and most likely the growth in the coming year small business owners believe is less defined. Reeling from risks and loss from previous years, today's business owners are not as willing to take bit leaps of faith.
Other Key Findings from the Survey
The survey provides insight into additional worries and concerns from business owners of small to mid-sized companies with revenue between $5 million and $100 million.
Employee Hiring Is Limited
To better understand the worries of business owners this year, consider the survey's results in the area of employee hiring. Often seen as one of the most important business confidence components, hiring trends are carefully monitored. They are defining components to the conditions business owners see on the ground about economic conditions. The survey shows these worries clearly. About 46 percent of small businesses feel that the current financial climate is making it hard for them to hire new employees.
About 20 percent of small businesses and 28 percent of mid-sized companies believe that economic uncertainty stops them from recruiting new employees. However, the survey also indicates that 57 percent of companies will add between one and 10 new employees over the next six months.
Acquiring New Customers
Another area of concern for today's business owner is the ability to find new customers. The survey indicates that as much as 35 percent of respondents feel that finding new customer leads will be one of their most significant challenges in the upcoming year. Securing new business remains one of the most concerned area for businesses because they are uncertain if economic conditions are positive enough to encourage new customer acquisition.
In the area of growing revenue, about 34 percent of businesses expect to perform substantially better in 2016 than they performed in 2015. That is markedly lower than what many experts believed. However, about 72 percent of these companies expect to see their revenue increase in the coming year by 10 percent.
Analyzing Business Worry
Small and mid-sized companies tend to be the bread and butter of the economic conditions within the United States. However, today's businesses have a weary, worried outlook for 2016. For some, this is due to the inconsistency of market conditions. For others, the risk of political conflict, the upcoming election year, and uncertain global impact on U.S. businesses continue to be factors in deciding economic outlook.
Most companies have concerns about the current economic condition. Even though growth is occurring, it remains slow and backslides in data are impacting the outlook of business professionals. Nevertheless, the foundation is present to allow for improvement in 2016 in many industries.
Ultimately, even as conditions improve slowly, they are improving. This is giving small businesses enough confidence to hire, even at a slower rate, and to grow. Opportunities for growth remain clear, but whether or not smaller and mid-sized businesses will be ready to take advantage of improving conditions is yet to be seen.