SMB CEOs’ Economic Outlook Dims
FOR IMMEDIATE RELEASE
June 28, 2011
Robins School of Business –Virginia Council of CEOs 2nd quarter survey finds continued uncertainty about business, economy for the next six months
For the second straight quarter, CEOs in central Virginia have shown a more pessimistic view of business and the economy looking ahead six months, according to the 2nd quarter 2011 CEO Economic Outlook Survey. The findings are in contrast to CEOs’ relative optimism in 2010.
The survey reveals that top executives of small and mid-sized companies anticipate either unchanged or decreased capital spending and hiring. Slightly more than half predict increased sales for the next two quarters. And results show that “economic uncertainty” is the most significant business issue CEOs face today, ahead of rising energy and healthcare costs, staffing, financial issues and political uncertainty.
The Virginia Council of CEOs and University of Richmond’s Robins School of Business jointly conduct the quarterly survey, which helps central Virginia companies anticipate business decisions and plan for growth.
“This is a clear indication that the current mindset of the CEO is to proceed with caution,” said Scot McRoberts, executive director of the council. “We are seeing good growth in a few sectors – health care, IT and staffing particularly. But, there is not a lot of confidence in either the overall growth of the economy or what Washington will do in terms of taxes and regulation.”
The following survey results, from the 2nd quarter 2011 and the 1st quarter 2011, show projections for the next six months for sales, spending and employment:
| 2011 Q2 | 2011 Q1 | ||||||
| Increase | No Change | Decrease | Increase | No Change | Decrease | ||
| How do you expect your company’s sales to change in the next six months? | 54.7% | 32.0% | 13.3% | 69.9% | 21.9% | 8.2% | |
| How do you expect your company’s U.S. capital spending to change in the next six months? | 31.1% | 40.5% | 28.4% | 28.8% | 56.2% | 15.1% | |
| How do you expect your company’s U.S. employment to change in the next six months? | 39.2% | 50.0% | 10.8% | 39.7% | 52.1% | 8.2% | |
The council and the Robins School collected responses from 75 business owners and CEOs in central Virginia. The average annual revenue year-to-date for CEOs responding was $3.3 million. The data was compared to the 1st quarter 2011 survey, which consisted of 73 participants. Multiple industries are represented in the sample (for example, construction, manufacturing, finance and insurance, and retail).
“What we see in these current data, relative to the previous quarter, are more CEOs anticipating no change, or a decrease, in some of their core business practices,” said Jeff Pollack, assistant professor of management at the Robins School, who calculated the results. “Based on data we collected about the issues these CEOs face, it could be that slow economic growth and economic uncertainty are related to this more pessimistic outlook.”
Pollack adapted the survey from the Business Roundtable, an association of CEOs leading U.S. companies that conducts a similar survey nationally.
The results also provide an overall economic outlook index, which is based on businesses’ projected six-month sales, spending and employment figures.
Economic Outlook Index
| Survey Date | CEO Economic Outlook Index |
| Q2 2011 | 74.17 |
| Q1 2011 | 85.63 |
| Q4 2010 | 92.27 |
| Q3 2010 | 94.47 |
The council continues to expand the survey beyond its members, offering any area business owners whose companies gross at least $1 million in annual revenue the opportunity to participate. If enough businesses participate, the council will provide survey results by industry. Participation is free, and all participants will receive copies of the survey data.
Business owners and CEOs who would like to participate in the next survey should contact McRoberts at smcroberts@vaceos.org.
All Smiles at the CEO Retreat
It’s all smiles at the 2011 CEO Retreat at Kingsmill Resort. Here are some highlights from today.
– It is hard to get to the meetings on time because there are so many cool people to talk to.
– Kingsmill always puts outstanding meals in front of us.
– Jay Goltz had the CEOs buzzing with his ideas about the “new” way to approach business.
– Somehow, we lined up 80 CEOs for this group photo in less than 10 minutes. No herding cats jokes needed.
– Robins School professor Jeff Pollack awarded coveted VACEOs bat for his work on the CEO Economic Outlook Survey.
– President Obama and family rumored to be arriving soon (don’t think he is here for our meeting).
– Eric Herrenkohl got us working on “How to Hire A-Players” and gives us the two most important interview questions. 1) Tell me a little about what you did in each previous job. 2) Follow up with broad, open-ended questions that get behind the programmed answers.
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Virginia SMB CEOs Less Optimistic Than The Big Guys
The First Quarter 2011 CEO Economic Outlook Survey for Central Virginia showed slightly lower expectations for the coming six months. While nearly 70% of CEOs expected increases in sales, only 40% saw increased hiring, and less than 30% expected increased capital spending. The Economic Outlook Index, a composite representative of these data, dropped slightly from 92.27 to 85.63.
The Virginia Council of CEOs (VACEOs) / Robins School of Business survey mirrors that of the Business Roundtable (BRT), an association of CEOs of leading U.S. companies. Interestingly, the BRT survey’s index jumped significantly – up 12 points to 113. This is the highest index since the BRT survey’s inception in 2002.
The graph above shows both the VACEOs / Robins School and BRT indices. Clearly, small and mid-sized businesses (SMBs) in central Virginia are not experiencing the same intensity of recovery as large businesses at this time. My interactions with VACEOs members tell me why.
- Large corporations’ moves during the recession to reduce workforce and limit spending helped them to maintain profitability and conserve cash. SMBs made similar moves, but limited economies of scale prevented most from being able to come out of the recession with the resources to expand as the economy rebounds.
- Small business did not get bailed out. The big guys did. Token efforts by the Feds to stimulate small business lending had little effect on the street.
That said, some central Virginia SMBs are coming out of the recession like the VCU Rams in the NCAA Tournament! They appear to be the ones that went into it with low debt and cash reserves (the ability to pick off weaker competitors), or those that are bringing innovation to market.
CEO Retreat Program Announced
The Virginia Council of CEOs recently announced the program for the 2011 CEO Retreat. This much anticipated annual event will feature presentations by small business blogger Jay Goltz and economist Alan Beaulieu. Also speaking will be the author of “How to Hire A Players”, Eric Herrenkohl and the CEO of Geomagic, Ping Fu.
The CEO Retreat will be held on April 6-8 at Kingsmill Resort in Williamsburg, Virgnia. Your can download the CEO Retreat 2011 Brochure or see the VACEOs web site for more details.
More than 100 CEOs of small and mid-sized Virginia businesses are expected to attend.
Area CEOs 2011 Outlook is Positive
For the second straight quarter, CEOs in central Virginia have an optimistic view of business and the economy in the coming six months. Top executives predict an increase in sales and also say they are more likely to hire new employees, according to the Fourth Quarter 2010 CEO Economic Outlook Survey.
Additional findings revealed that CEOs are continuing to forecast an increase in their company’s capital spending, as well as predicting less of a decrease in sales than they expected during the third quarter.
The Virginia Council of CEOs and University of Richmond’s Robins School of Business jointly conduct the quarterly economic outlook survey, which helps central Virginia companies plan for growth.
“There’s once again optimism about the future, and we are excited to see this trend continue,” said Scot McRoberts, executive director of the Virginia Council of CEOs. “We have found that this data is consistently a good indicator of current market conditions and what business owners and their peers are thinking about in regards to future trends and opportunities.”
The following survey results, from the fourth quarter and the third quarter, show projections for the next six months for sales, spending and employment:
| 2010 Q4 | 2010 Q3 | ||||||
| Increase | No
Change |
Decrease | Increase | No
Change |
Decrease | ||
| How do you expect your company’s sales to change in the next six months? | 70.4% | 22.5% | 7.0% | 72.0% | 18.7% | 9.3% | |
| How do you expect your company’s U.S. capital spending to change in the next six months? | 33.8% | 50.7% | 15.5% | 46.7% | 33.3% | 20.0% | |
| How do you expect your company’s U.S. employment to change in the next six months? | 52.1% | 40.8% | 7.0% | 52.0% | 40.0% | 8.0% | |
The council and the Robins School collected responses from 70 business owners and CEOs of companies in central Virginia with more than $1 million of annual revenue. The data was compared to the third quarter survey, which consisted of 73 participants. Multiple industries are represented in the sample (i.e., construction, manufacturing, finance & insurance, and retail).
“Similar to the trend we saw from the third quarter of 2010, we continue to see lower percentages of CEOs reporting pessimism about future sales, capital expenditures and employment,” said Jeff Pollack, assistant professor of management at the Robins School, who calculated the survey results. “These fourth quarter data show that more CEOs are anticipating increases, or at least no changes, relative to past data which showed they were predicting future decreases across all categories.”
Pollack adapted the survey from the Business Roundtable, an association of CEOs leading U.S. companies that conducts a similar survey nationally.
The results also provided a perspective of the economic outlook index, which is based on businesses’ projected six-month sales, spending and employment figures.
Economic Outlook Index
| Survey Date | CEO Economic Outlook Index |
| Q4 2010 | 92.27 |
| Q3 2010 | 94.47 |
| Q2 2010 | 81.33 |
The Virginia Council of CEOs is continuing to expand the survey beyond its membership offering any area business owners whose companies gross at least $1 million in annual revenue the opportunity to participate. If enough businesses participate, the council will provide survey results by industry. Participation is free, and all participants will receive copies of the survey data.
Business owners and CEOs who would like to participate in the next survey should contact McRoberts at info at vaceos dot org.
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