Big Sky Weekly
business
CEOs Say They’re Hiring, Recovery is Accelerating By Alex Tenenbaum For the first time in three years, the majority of small-business CEOs nationwide said they plan to hire in the next twelve months, according to a recent Vistage CEO Confidence Index study. Of the 1,729 respondents in the quarterly study, 77 percent expect increased revenues and 63 percent foresee higher profits in their own companies. A whopping 54 percent expect to expand their staffs in 2011, while only one in 20 said they’d have to trim back. “On the whole, companies are coming out of their bomb shelters,” said Becky Smith, Ed.D., the Vistage Chair in Bozeman. “They are no longer in survival mode. Increasing revenue means there’s more money to invest in growth, more money to invest in people, and more money to enter into new markets.” The quarterly Vistage CEO Confidence Index is the nation’s largest and most comprehensive report on the opinions and projections of CEOs at small- to mid-sized businesses (grossing at least $5 million annually). Since its inception in 2003, the index has fairly accurately predicted changes in GDP and employment two to three quarters hence. The overall confidence of CEOs spiked in the fourth quarter. After reporting an overall confidence rating of 93.7 for the first quarter of 2010, 94.4 for the second and 95.1 for the third, the index exploded to 106.3 for the fourth quarter. The surge in confidence is tempered by hardship. Nearly half of the CEOs surveyed said they used personal assets in the last three years to keep their companies afloat and their people employed. “CEOs are pouring a lot of blood, sweat and tears into their companies right now. They will be the heroes of our economic recovery,” Smith said. Christian James of Xcentric, a cloud data hosting company for accounting firms, with offices in Bozmeman and Atlanta, participated in the Vistage survey. A Vistage member CEO for six years, he said he expects his company of 40 current employees will add four new positions in Atlanta, and another four to six in Bozeman in 2011. All of these positions will be in computer technology.
“We have a desire to invest and to grow, and the way the economy looks, we’re pretty confident in doing so,” he said. At the depths of the recession in late 2008, 97 percent of the CEOs said their companies were in decline. In this latest study, just seven percent reported continuing declines. For the broader economy, 58 percent of CEOs expected improvement during the year ahead, while just five percent expected any further declines. That’s the most favorable outlook for economic growth since the start of 2004. Revenue growth was expected by 77 percent of all firms in the 4th quarter survey, up from 59 percent one year ago and 36 percent two years ago. Just fiver percent anticipated declines in revenues, the lowest proportion in five years. Given that 60 percent of firms expected no increase in the prices they charged, most of the revenue gains were expected to come from increased sales. The relative inability to pass along cost increases to their customers meant that managing costs was a top priority for one-in-five firms. Another one-infour firms placed greater emphasis on maintaining or expanding their customer base.
“On the whole, companies are coming out of their bomb shelters...They are no longer in survival mode.” - Becky Smith, Ed.D., Vistage Chair in Bozeman. common. At their helms are Vistage member CEOs, who participate in chair-led advisory board peer groups, receive one-to-one coaching, learn from expert speakers, and interact among a global network of CEOs from a broad range of industries. A 2010 analysis showed that Vistage member companies in the U.S. substantially outperformed the average comparable Dun & Bradstreet companies in growth over the last five years.
The Q4 2010 Vistage CEO Confidence Index includes responses from 1,729 US CEOs, surveyed between December 14 and December 24, 2010, with a margin of error of 1.6 percentage points. Vistage International serves more than 14,000 members in 15 countries. Vistage member CEOs participate in chairled advisory board peer groups, receive one-to-one coaching, learn from expert speakers, and interact among a global network of CEOs from a broad range of industries.
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Two thirds of all firms expected increased profits during 2011, double the number of CEOs who expected rising profits at the low point two years ago. Among all firms, 46 percent planned to increase their investment spending, up from 34 percent one year ago. While there remains some uncertainty about whether the strength in their future sales would be long lasting, the investments now planned by CEOs have increasingly reflected the likelihood that growth in their firm’s sales would justify those investments over the foreseeable horizon. This is certainly a bevy of good news for national and state economies, especially since the index has proven to be a reliable indicator of economic shifts, predicting the Great Recession six months before the markets slid. However, the companies represented in the index are not a random sample. Rather, they all have one thing in
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Celebrating 40 years of business serving Montana and the Gallatin Valley! 1184 North 15th Ave. Ste. 1, Bozeman, MT 59715 Phone (406) 587-9239 Fax (406) 586-4737 March 4, 2011 27