Small and midsize business (SMB) CEO confidence declined more than 36 percent in the second quarter of 2022 when compared to the year prior, per the latest CEO Confidence Index from Vistage, a CEO coaching and peer advisory organization.
Vistage’s CEO Confidence Index, which has measured SMB leaders’ sentiment regarding economic and business factors each quarter since 2003, dropped to 69 during the second quarter, down from 84.3 in the first quarter, but still above the pandemic shutdown in 2020 (65.5), and the Index’s all-time-low during the Great Recession in the fourth quarter of 2008 (48.7).
The drop in confidence is accompanied by a sharp increase in concern about current and future economic conditions: 64 percent anticipate worsening economic conditions in the year ahead and 68 percent believe that the national economy has already worsened.
“The only thing that remains certain for small business CEOs in the year ahead is more uncertainty,” said Joe Galvin, Vistage’s chief research officer. “With concerns of potential recession or stagflation on the horizon, we anticipate CEOs’ confidence will continue to diminish in the months ahead. However, we do see a bright light in the form of hiring; while it has slowed from the white hot, post-pandemic surge, an overwhelming majority are either still looking to hire or keep headcount the same, regardless of widespread pessimism about economic conditions.”
Survey highlights include:
Remote work remains a challenge for leaders
- 50 percent of SMB CEOs report their current workforce is hybrid; 7 percent say it’s all-remote
- Over half of those who allow remote or hybrid work believe collaboration (60 percent), culture (55 percent) and communication (52 percent) have been negatively impacted by remote work
- Those who allow remote or hybrid work say remote work has had no impact on customer satisfaction (78 percent), accountability (53 percent), or productivity (53 percent)
Bottoming levels of optimism, amid declines in revenue and profit
- Just 8 percent of SMB CEOs believe the overall economic conditions in the U.S. will improve in the next year; only 14 percent feel economic conditions have improved over the last year
- 52 percent expect increased revenues in the year ahead (down from 68 percent in Q1 2022 and 74 percent in Q4 2021)
- 32 percent anticipate higher profits in the year ahead, which equals the all-time low first recorded at the height of the Great Recession at the close of 2008.
- Meanwhile, 76 percent plan to increase prices for their product/service in the next year
Hiring plans have softened, but talent shortages persist
- 52 percent of SMB CEOs plan to increase their total number of employees in the next 12 months (down from 65 percent one quarter ago and 76 percent two quarters ago); 40 percent say their headcount will remain the same
- 65 percent report hiring challenges are impacting their ability to operate at full capacity
- For those having trouble hiring: 80 percent have already boosted wages, 63 percent have refined their recruitment strategies, 62 percent have offered flexible hours/schedules, 62 percent are allowing remote work options, 40 percent have created apprentice and internship programs
Steep decreases in planned investments, as inflation persists
- 38 percent of SMB CEOs plan to increase their investments in plants and equipment in the next 12 months (down from 45 percent last quarter and 52 percent two quarters ago)
- When asked about which effects of inflation are impacting their business:
- 89 percent said increased wages and compensation
- 82 percent cited increased prices from vendors
- 63 percent experienced higher energy prices
- 61 percent reported higher costs for raw materials
See the full results for the Q2 2022 Vistage CEO Confidence Index.
Learn more at vistage.com.