A majority of business leaders are feeling upbeat about their companies’ prospects in 2022 despite continued uncertainty about COVID-19, and supply chain and inflationary challenges, according to the JPMorgan Chase 2022 Business Leaders Outlook Survey released Wednesday.
As the new year begins, 83 percent of midsize and 71 percent of small businesses are optimistic about their own performance in 2022, up from 77 percent and 63 percent one year ago, respectively.
Business leaders also have increased optimism around their industry performance and local, national, and global economic outlooks compared to the start of 2021. Despite continued uncertainty posed by COVID-19, businesses are setting their expectations high, with 81 percent of midsize businesses and 63 percent of small businesses anticipating revenue and sales growth in the year ahead.
In line with these expansion plans, more than four in 10 of those surveyed expect credit needs to increase in 2022, representing the highest percentages recorded in the last five years.
“Businesses have been key accelerators of the continued economic recovery through their resolve and ingenuity in finding new ways to deliver products and services to their customers,” says Jim Glassman, head economist for JPMorgan Chase Commercial Banking. “They now have a stronger sense of how to remain competitive in the current economic landscape, which should allow them to build on last year’s momentum.”
More than half (53 percent) of midsize businesses are operating at least at the same capacity as they were before the COVID-19 pandemic, with nearly one-third (31 percent) now running at a greater capacity than their pre-pandemic levels, indicating that some businesses have leaned into the disruption and continued to grow.
Seventy percent also have seen profits return to or exceed pre-pandemic levels. The return to pre-pandemic productivity is on track to continue as 9 out of 10 midsize businesses expect to grow in 2022, with the most common growth drivers including expansion into new markets or geographies, innovation or diversification in product and services and increased consumer demand.
In response to today’s challenges, small and midsize businesses have made changes to their business models, including:
Supply Chain Workarounds: To alleviate supply chain disruptions, nearly two-thirds (65 percent) of midsize businesses have used strategic stockpiling and more than half (51 percent) have added suppliers from new geographies. A significant number have also allocated more funds to cover increased costs related to moving products (48 percent), changed materials or manufacturing processes (32 percent), and replaced or stopped doing business with certain suppliers (30 percent).
Employee Incentives: In response to recruiting and hiring concerns, 81 percent of midsize businesses and 38 percent of small businesses have or plan to increase wages. Flexibility is also a key consideration for many business leaders, with 45 percent of midsize businesses having or planning to give employees flexibility on where they work and 40 percent of small businesses already offering or planning to offer employees more flexible hours. To retain staff, small businesses have boosted their employee benefits, such as health insurance (61 percent) and 401K programs (37 percent).
New Consumer Channels: While small businesses are concerned about how shifting consumer preferences due to COVID-19 will impact them, they are increasingly taking action to reach consumers via digital channels. Nearly one-quarter (24 percent) of small businesses have implemented more contactless payment options and 22 percent have increased selling on social media platforms. In the year ahead, 19 percent expect to move to a nearly 100 percent e-commerce model, up from 12 percent one year ago.
“Businesses today are eager to grow, but are having to navigate the reality of not being able to fill open roles quickly enough and dealing with disruptions in their supply chain that are slowing them down,” says John Simmons, head of middle market banking and specialized industries at JPMorgan Chase Commercial Banking.
“At the same time, it’s encouraging to see companies’ adaptability and the pivots they’ve made to push through major pain points. I’m inspired everyday by the grit and ingenuity of America’s business leaders, who have continued to shine throughout the pressures of the past 18-plus months.”