Despite reported increased revenues over the past year, according to the Springfield Business Journal 2023 Economic Growth Survey, business leaders are not overly confident in their local economic outlook. Nearly 40% of respondents say they think a recession will happen by the end of the year, leading to apprehensions about the sustainability of economic growth.
Additionally, on a larger scale, the Small Business Optimism Index by the National Federation of Independent Business remains below a 49-year average, though it inched up 1.6 points to a score of 91 in June, as business owners cited concerns about inflation and labor quality.
“Halfway through the year, small-business owners remain very pessimistic about future business conditions and their sales prospects,” says NFIB Chief Economist Bill Dunkelberg in an online statement. “Owners are still raising selling prices at an inflationary level to try to pass on higher inventory, labor and energy costs.”
Travis Walker, a shareholder at KPM CPAs & Advisors, has a local take: “Consumers can only handle so much inflation,” he says, adding sales may be robust due to rising prices across the board, but he questions whether the trend is sustainable. “We might be in a time of a plentiful cash flow, but what’s the general long-term outlook?”
Walker says now is a good time for business leaders to look strategically at their resources and determine the most impactful ways to allocate them, rather than waiting for the next economic dip. He suggests as a first step to thoroughly review a company’s financial reporting and cash-flow cycle.
“Start the conversation now with your financial professional,” Walker says, emphasizing that businesses should be proactive. “Clients should bring up their concerns and set up goals for long-term planning.”
He adds that small adjustments to a budget can be efficient in making a bigger impact to the bottom line, particularly during times of low confidence.
“It’s hard to insulate against future challenges, and there’s no cookie-cutter approach either,” he says, “but budgets are building blocks that give you a view of what the business structure really is.”
Once business leaders have taken a look at their budgets, Walker says allocating resources is the next step, particularly when cash is flush. In the SBJ Economic Growth Survey, the top three strategies for future growth, according to respondents, are expanding to new markets, developing the next generation of leaders and expanding the use of technology. Walker agrees that these areas are crucial for economic sustainability, and they easily go hand-in-hand with each other.
“Speaking generally for businesses, to be competitive, you’ve got to use the right tools to pass value along to the clients,” he says.
Walker says finding and developing staff talent to understand the fast-moving technological advances is important to stay at the forefront of competition. This remains a national challenge, however, according to the NFIB. Over 90% of businesses currently hiring report that there are few, or no, qualified applicants for open positions, with the lowest openings in the agriculture and finance sectors.
Despite the lower levels of confidence across sectors, Walker says there is opportunity for businesses to be nimble and creative.
“If businesses are proactive,” he adds, “disruption or recession can even cause opportunities if they wisely steward their resources to do better than their competition.”
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