A recent Grant Thornton CFO survey conducted in the fourth quarter of 2023 showed dramatic increases in finance leaders’ expectations of their ability to meet business goals related to their supply chain needs, labor needs, increased customer demand, cost control and growth projections.
The survey polled over 200 finance decision-makers from U.S.-based companies across the industry spectrum with at least $100 million in annual revenue.
Fifty-seven percent said they are confident they can meet their labor needs, up from 49% in the third quarter.
This was also an all-time high since the question’s inception in the fourth quarter of 2021.
A STARK CONTRAST …
The Grant Thornton survey is quite different from another recent survey by the National Federation of Independent Business (NFIB) which found that U.S small-business optimism suffered its biggest drop in more than a year.
The survey cited several reasons for the decline in optimism, including deteriorating profits and diminishing sales expectations. In fact, the most recent survey (January 2024) found that their confidence level registered the biggest monthly decline in over a year.
Given that the findings of these surveys are in stark contrast with each other, it’s important to understand why these two groups have such differing views of the economy and their prospects for success.
MOST SIGNIFICANT DIFFERENCES …
One of the most significant differences is the size of the companies participating in each survey. The Grant Thorton survey includes companies with at least $100 million in annual revenue.
The NFIB survey includes over 600,000 small independent businesses with an average revenue of $1.3 million.
There are significant differences between the two groups not only in the size of the company and financial strength but also in the level of quality and number of resources available to them in dealing with the problems they face.
In fact, smaller businesses face the same issues that larger businesses face, however they have far fewer resources available for help.
Given that the majority of US businesses are small businesses, over 90% according to the Small Business Association, their ability to be able to cope with their challenges is extremely important.
3 CRITICAL AREAS …
In fact, the top three critical areas they indicate worrying about are:
- a lack of confidence that the economy will improve;
- a lack of expectation for higher sales,
- and a diminished expectation for improved credit conditions.
While small businesses are admittedly at a significant disadvantage compared to larger businesses, there still are a number of tools and resources available to them to help overcome their challenges.
For example, technology has improved significantly and provides a platform for becoming more efficient and reducing expenses, as well as improving growth opportunities.
COST EFFECTIVE SERVICES…
There are a wide range of cost-effective software services that are available for purchase or on a time-share basis, which can have a significant impact on the profitability of a business if used properly.
Using technology tools can enable small businesses to add new customers, re-engage customers that no longer purchase from the business and identify the most profitable customers to target.
There are also options available for small businesses to improve their financial resources and thereby have more financial capital available to invest in their business.
The Small Business Association (SBA) has a number of loan guarantee options available ranging from micro-loans of up to $50,000 as well as loans for equipment, business capital and real estate ranging from $500,000 to $5.5 million.
The SBA also provides a range of resources that can help business owners manage and grow their business.
COMMUNITY BANKS …
In addition to the SBA, there are regional and community banks that have financial programs and specialists that are dedicated to helping small businesses find financing solutions.
They also have available treasury tools that can make it easier for small businesses to transact business.
It is also possible for business owners to use attorneys as a resource for legal and business advice to ensure they are avoiding any legal problems or potential lawsuits for unintended consequences of business activities.
There are a number of boutique law firms that are focused on helping small businesses. They typically have financial arrangements that are more affordable for small businesses and have contacts in areas outside of the legal field that can be helpful.
Many of these firms publish weekly newsletters and podcasts, which could be helpful in providing business knowledge to the owners of small businesses.
SMALL BUSINESS OWNERS …
While owners of small businesses are concerned about the future, perhaps if they had more insight into the fairly extensive resources that are available to them to not only overcome their obstacles, but also to help grow their business, they might feel more optimistic.
So, is the rise in confidence in the economy misplaced?
Not for most businesses that are willing to look beyond their current situation and identify and capitalize on the resources that are available to them to plan and execute a profitable business plan.
Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.
