Confident But Cautious: CEOs Share Their Outlook for 2019

A year ago, CEOs from small and midsize companies were feeling overwhelmingly positive about the future of their business and the U.S. economy. But what about this year? The CEO outlook has changed, according to new report released from Vistage. A survey conducted in Q4 found that CEOs from small and midsize businesses are entering 2019 with a sentiment best described as “confidence with caution.” The majority of the 1,257 CEOs polled expressed a positive forecast for their own businesses, but also shared concern about the future performance of the U.S. economy.

The report, based on analysis of the survey data, reveals that:

  • Few expect the economy to improve. Only 14% of CEOs said the U.S. economy will improve this year, and 33% expect it to get worse.
  • Many businesses are hurting from tariffs. About 43% of CEOs said that they’ve been negatively affected by tariffs, with those from wholesale trade, manufacturing and construction among the hardest hit.
  • Optimism has declined overall. The Vistage CEO Confidence Index, which measures the overall optimism of CEOs from small and midsize businesses, dropped to from 110.3 in Q4 2017 to 95.4 in Q4 2018. This is lowest level recorded since Q4 2015.

These factors are influencing how CEOs approach key aspects of their business in 2019, including talent, investments, customer engagement, operations, financial management and leadership development. Our data indicates that CEOs are focused on the following priorities and plans this year.

TALENT

The priority: Recruiting and retaining talent is a priority for many companies this year. More than half of CEOs (65%) say they plan to hire this year, while 30% say they will invest in retaining the workforce they currently have.

The plan: To attract and keep top talent, CEOs are implementing tactics such as improving employee development (71%), boosting wages (65%), adding employee benefits (36%) and investing in equipment to automate (35%).

CUSTOMER ENGAGEMENT

The priority: CEOs identify customer service as a top priority for 2019. The majority of CEOs (70%) say that they expect sales revenues to increase this year, which means they anticipate acquiring new customers or selling more to existing customers.

The plan: Top strategies for improving customer engagement include expansion (increasing acquisitions, new products and new markets), talent (hiring sales people and key leaders) and marketing (creating demand in new and existing markets). Some companies are also leveraging artificial intelligence to better serve customers.

OPERATIONS

The priority: With productivity a top priority this year, CEOs are looking for new ways to streamline processes, align resources and reduce waste.

The plan: More than half (52%) of CEOs say they plan to invest in technology in order to boost their productivity. Top investments include software or applications for CRM (45%), accounting (33%) and cybersecurity (30%).

FINANCIAL MANAGEMENT

The priority: Only 61% of CEOs expect their profitability to increase this year, so many are exploring how they can manage cash flow more effectively.

The plan: More than half (54%) of CEOs plan to raise their prices in 2019. Many are also taking a critical eye to Key Performance Indictors to improve visibility and predictability in their business cycles.

LEADERSHIP DEVELOPMENT

The priority: Building a strong culture is a top priority for CEOs, particularly those who anticipate an economic slowdown this year.

The plan: Savvy CEOs are treating culture as their organizational gravity — the magnetic force that keeps their employees grounded to the business, repels employees who don’t fit the business and attracts like-minded people to the business.

This last point may be the most important one for a year like 2019. Research shows that culture directly impacts a company’s productivity, profitability, employee retention and hiring. Translation: Businesses that build a strong culture will keep growing—even when the economy isn’t.


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