Small Business CEOs Optimistic About Growth
CEOs expect to increase profits
While CEOs of small to medium sized businesses have lowered their expectations for the pace of growth in the overall economy, they remain confident that, over the next twelve months, they will increase revenues and profits as well as hire new employees, according to the Vistage CEO Confidence Index 2nd quarter results.
In the fourth quarter of 2008, CEO confidence indexed at 48.7 – an all-time low since the survey began in 2003. According to University of Michigan’s Dr. Richard Curtin, who has directed the survey since its inception, CEO confidence rose to 94.4 this quarter, marking the sixth consecutive quarterly increase.
According to Vistage International Chairman and CEO Rafael Pastor, the Q2 results are particularly significant, “CEOs of small to medium size companies have adjusted to the lean economy, are doing more with less, and have positioned their companies for success. Their continued confidence sends a strong message that small and medium sized businesses will be among those who will lead our overall economic recovery.”
Planned declines in employment fell to just 9 percent in the 2nd quarter of 2010, the lowest level in three years. Plans to expand their workforce were reported by 44% of all CEO’s in the 2nd quarter survey, unchanged from the prior quarter. Among all firms, however, 47% expected to keep the overall number of employees constant, up from 44% in the prior quarter and the highest percentage in the past decade.
Growth in revenues was expected by two thirds of all firms in the 2nd quarter, unchanged from the previous quarter but well above the half of all firms that expected revenue gains a year ago. Increasing profits were expected by 54 percent of all firms in the 2nd quarter of 2010, a level that has not changed over the past three quarters.
The majority of CEO’s (87%) believe the federal government does not understand the challenges face by small businesses well enough to expand their business opportunities. These CEOs are concerned about increased taxes, regulations and government interference that hinder entrepreneurship.