Small Business Performance Resilient in the Face of Headwinds

By Nathan Eddy  |  Posted 2013-11-29 Print this article Print

One-half of small business executives say their full-time workforce has grown over the last 12 months, compared to 34 percent who said so this spring.

Sales at small and midsize businesses (SMBs) are trending higher, with 58 percent reporting higher revenues over the past 12 months, according to a Deloitte-sponsored survey of 503 executives at midsize companies in the United States during September and October.

As the performance of midmarket companies continues to improve—with a majority of executives (58 percent) anticipating revenue growth over the coming 12 months—staffing up for growth is one of the key priorities.

One-half of small business executives say their full-time workforce has grown over the last 12 months, compared to 34 percent who said so in the spring.

Looking ahead, 54 percent of midmarket executives said they expect their full-time workforce to grow in the next 12 months, compared to 38 percent in the spring.

"The economy continues to operate with great levels of uncertainty and yet midmarket companies in general are performing well and their executives have an increasingly positive outlook. This is a true testament of this segment's resilience," Tom McGee, deputy CEO of Deloitte LLP and leader of Deloitte's midmarket practice. "Our findings indicate that despite headwinds, midmarket companies are well poised to take advantage of a potential uptick in the economy."

Almost one-half (49 percent) of midmarket businesses said they have realized productivity increases in the past 12 months, compared to 38 percent in the spring. In addition, these companies have continued to beef up coffers, with 41 percent reporting higher cash balances compared to 34 percent in the spring.

Despite the strong performance of small businesses, the survey highlighted ongoing challenges that continue to be top of mind for executives both for their own businesses and the economy at large.

Specifically, midmarket executives pinpoint government budget challenges (62 percent versus 69 percent in the spring), rising health-care costs (59 percent versus 60 percent in the spring), and high tax rates (42 percent versus 53 percent in the spring) as the primary obstacles to their business prospects and to U.S. economic growth.

"Despite improvements in sentiments around budget challenges and tax rates, factors related to the government continue to be a main concern for the majority of midmarket executives," McGee continued. "Furthermore, it appears that midmarket executives link the threat of rising health-care costs to the passage and implementation of the Affordable Care Act."

The United States continues to be far and away the largest contributor to growth for midmarket companies, as an overwhelming 89 percent of SMB executives say the domestic market accounted for most of their business growth over the past 12 months.

Looking ahead to the next 12 months, however, this number drops to 81 percent, demonstrating a renewed focus on global growth opportunities. Indeed, an increasing number of midmarket companies reported at least some of their revenues over the past year coming from outside the United States.


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