Top Business Challenges
COVID-19 is the top external challenge companies faced in 2020 (65.7%), followed by domestic economic conditions and the cost of employee benefits. Last year’s top challenge—developing new products/services/markets—dropped from 35.1% to 19.8%.
The Impacts of COVID-19
Almost three out of four businesses were negatively affected by COVID-19, and businesses across all industries felt an adverse impact from the pandemic. Some companies struggled more than others, and the level of impact was felt differently in each industry. When asked which part of their business was most impacted by COVID-19, respondents most often cited loss of sales and revenue, employee demand, and a decrease in demand for services. In addition, to cope with the pandemic, businesses had to reconsider many of their operating assumptions—including staffing/recruiting, remote work and new office arrangements, and new technology and automation investments.
While all industries were negatively affected by COVID-19, some were more affected than others. The non-profit/education and healthcare industries were most negatively impacted by the pandemic, while technology and professional services were least affected. That said, roughly two thirds of respondents in these industries experienced challenges.
Sentiments on 2020 Election
While 4 out of 10 businesses believe the 2020 election will have a negative impact on their business, the majority have a positive or neutral outlook. In the group holding a negative outlook, respondents worried most about increased taxes and regulations, anti-business government, and increasing lockdowns. Roughly 1 in 4 believed the outcome of the election would result in a positive impact for their business. These respondents looked forward to greater stability/predictability and more generous healthcare reimbursements.
Attitudes toward the election varied by industry. Technology companies have a more positive outlook than most. Common reasons for positive expectations include better leadership, an improved COVID-19 response, and greater market stability.
Among all industries in the study, C&RE was the most negative toward the election, with increased taxes and more regulations as their top concerns. More healthcare respondents believe the election will have a negative impact on their business than believe it will have a positive effect, but almost a third of respondents believe the election will have no effect at all on their business.
M&D companies are overall not optimistic about the election, primarily because of potential increases in taxes and regulations. However, 1 in 5 M&D companies think the election will have a positive impact, specifically because of better stability and predictability in the market, and improved foreign relations and global business. This last factor could explain why optimism about the world economy is higher in the M&D industry than last year.
Future Outlooks and 2021 Goals
Perceptions of the U.S. and World economies are the lowest we have recorded since we started this study, and respondents’ outlook on their regional economies saw the steepest decline in optimism since last year. Of respondents’ outlook on the global, national, and regional economies, the world economy fared the worst.
Growth and improving financial performance are top goals heading into 2021. Like last year, growing sales/products (69.8%) and services and improving financial performance (55.0%) were respondents’ top two business goals. A greater percentage of businesses than last year are looking to improve their information management capabilities. While not in the top four, finding and retaining top talent remains a key goal for 2021.