Most would agree that 2017 was a very good year for business. Will this trend last into 2018?
A recent report by the Conference Board — an independent business membership and research association — revealed a strong showing for business in 2017 and projected the U.S. economy will grow 2.5 percent in 2018. Those findings seem to line up with the results of a survey conducted earlier this year by LBMC, a Tennessee-based professional services firm.
Business leaders from across the country in a range of industries participated in the survey. The results: a strong majority of key executives reported revenue growth in 2017 and were cautiously optimistic about 2018. Among their identified priorities for the new year: plans to enhance operational efficiency to drive success. Top strategic priorities within these operational-efficiency plans included managing talent, the use of automation, and harnessing and utilizing company data.
Other key findings from the survey:
- Revenue growth: Almost all the surveyed executives expect increases of between 3 percent and 9 percent
- Hiring: 44 percent expect to increase employment
- Capital spending: Executives were evenly split on with 48 percent expecting to boost spending, while 47 percent expect it stay the same
- Tax rates: The vast majority of respondents indicated that aggressive tax rates, particularly for federal taxes on corporations, were top of mind
- “What is the main challenge facing your organization?” Executives indicated that regulatory requirements/changes were their leading concerns. And cybersecurity was most on their minds.
- Greatest risk: Labor costs were cited as the inflationary factor that represented the greatest risk to their businesses.
The goal of the Business Outlook Survey was to review business activity in the past year and provide insights on how business leaders are viewing prospects for the next 12 months. More than 260 business leaders, most in the C-suite, responded to the survey. They represented a cross-section of industries, including healthcare, construction, financial services/banking, manufacturing, professional services, real estate, retail trade and technology.
Some key issues explored in the survey:
Regulatory requirements/changes was listed as one of the main challenges facing their business by 43 percent of respondents. Employee and benefit costs was cited by 36 percent, and developing new products/services/markets was a main challenge for 34 percent.
Following those were:
- Availability of top personnel, 32 percent
- Domestic competition, 28 percent
- Changing customer preferences, 26 percent
- Domestic economic conditions, 24 percent
- Staff turnover, 24 percent
- Materials/supplies/equipment costs, 23 percent
- Stagnant/declining market, 17 percent
- Domestic political leadership, 7 percent
When asked about taxes, 71 percent of respondents said that reform of federal corporate taxes was of most concern. Aggressive state tax laws were of most concern to 23 percent, and U.S. taxation of overseas activities was cited as the top issue for 7 percent.
When asked about inflationary factors that represented the most significant risk to their businesses, 55 percent of respondents pointed to labor costs, 14 percent said raw material costs, 13 percent said interest rates and 15 percent said other.
Of the respondents who said their businesses would increase capital spending in the coming year, nearly 60 percent said they planned to focus that spending on Information Technology. The area of greatest concern was cybersecurity. Asked what actions they planned to take in the coming year on cybersecurity, 52 percent said they planned to use new software security tools, 45 percent said they would perform a cybersecurity risk assessment, 22 percent said they planned to update third-party risk management policies and 18 percent said they would create a response plan for security breaches.
While there are positive expectations for 2018, the economic forecast may turn cloudy by 2019, according to UCLA Anderson senior economist David Shulman. Prepare to make the most of 2018 by planning ahead. How do your plans for 2018 compare to other business leaders? The Business Outlook Survey contains a range of information that can help businesses plan for the coming year.
Suzanne Reed is director of marketing at LBMC. She has more than 20 years of experience in the financial services, professional services and payments industry. Contact her at 615-309-2282 or firstname.lastname@example.org.
Originally posted in The Tennessean.