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While American businesses are cautiously optimistic about their performance this year amid growing uncertainty surrounding the U.S. economy, business leaders’ optimism is tempered by rising taxes and mounting health-care regulation, according to a survey of 3,500 small and midsize businesses (SMBs) conducted by Chase, the consumer and commercial banking division of JPMorgan Chase & Co.
The 2013 Chase Business Leaders Outlook survey found just 6 percent of midmarket companies and 4 percent of small businesses plan to cut back on headcount. More than 85 percent of all respondents point to expected sales growth as the motive for adding staff. Overall, 55 percent of midsize companies and 31 percent of small businesses plan to hire new employees.
Although small business owners are almost twice as likely to hold a pessimistic view of the national economy than midsize respondents, confidence grows closer to home, with more than half of respondents expressing a positive view of their local economy and more than 70 percent having a bullish outlook for their own company’s performance.
Midmarket respondents were more optimistic, with nearly three-quarters (74 percent) projecting an increase in sales compared to 60 percent of small businesses, and 64 percent expecting an uptick in profits compared to 55 percent of small businesses.
Wages are expected to increase among middle market companies, with 66 percent saying that they expect a modest increase in compensation, up 3 percent from last year. The majority of small businesses (60 percent) expect compensation to remain flat, while 31 percent expect wages to rise, the survey revealed.
“It is a good sign that we are seeing businesses remain confident about their own performance and local economy, despite facing broader economic challenges,” Doug Petno, CEO of Chase Commercial Banking, said in a statement. “Business leaders feel better about things they can touch and control.”
The majority of businesses are taking a cautious approach to borrowing, with less than one-third anticipating an increased need for additional credit. Survey results indicated new financing would be primarily geared towards capital equipment and working capital as business owners focus on attracting new customers, expanding products and services, and cross-selling to their existing client base.
In addition, the survey revealed 29 percent of midmarket companies and 30 percent of small businesses anticipate a need for additional credit in 2013, primarily for capital equipment and working capital. Slightly less than two-thirds (61 percent) of midmarket companies are active in global markets, up 18 percent from two years ago.
However, the report suggested the current regulatory environment remains a concern, with 72 percent of midmarket companies and 60 percent of small businesses saying it makes it more difficult to add workers. “Growing their customer base is critical for all companies, especially for small business owners who said that adding new customers is far and away their biggest concern,” Scott Geller, CEO of Chase Business Banking, said in a statement.