Small to midsize businesses have felt the hurt of the coronavirus as revealed in the recent Vistage CEO Confidence Index, based on a survey of 1,392 U.S. CEOs, conducted between June 1 and June 8, 2020. The private advisory group Vistage Worldwide, Inc.’s index measures CEO confidence with the most recent index of 65.5 hitting below the low point of the Great Recession with an index of 69.9 in 2008. It is also a dramatic drop from 2020 Q1 of 84.7, highlighting the rapid and deep impact of the virus on the small business sector of the economy. It is the third-lowest mark in the history of the Vistage CEO Confidence Index.
“Although the renewed GDP growth anticipated in the 3rd quarter may well signal an end to the “official” recession, it will take much longer to restore the financial viability to all firms, with significant differences across industries and regions of the country,” said Dr. Richard Curtin, research associate professor at the University of Michigan, who analyzed the data.
The forced shutdown of the economy taken to thwart the virus resulted in 80% of SMBs reporting some amount of revenue decline. CEO optimism about the recovery is low, as the survey reports revenue projections are the lowest since the Great Recession. Thirty-one percent of CEOs expect lower revenue in the coming year, while 33% anticipate declines in their profits over the same period.
As unemployment levels hit 14.7% nationally in April, surveyed CEO’s have significantly tempered their rehiring plans with 41% of CEOs only planning to maintain their workforce levels, while 22% plan to decrease their staff versus last quarter’s 9% of planned decreases.
“Even the most optimistic economist foresees a long and hard climb out of the ‘Corona-ditch.’ Despite the recent positive jobs report, more than 20 million people – all of them consumers – remain out of work and therefore not spending,” said Joe Galvin, Chief Research Officer at Vistage.
While the coming months are seen as a battle for recovery, more than half of CEOs surveyed (51%) expect economic conditions to improve further out, in the range of 6-12 months or longer. This then positively translates into 47% of them anticipating their business will regain momentum in that time frame and 27% even believe their business will be stronger than before.
For some small and midsize businesses the re-opening transition is underway as they execute return to work plans or are now formulating ones, with 31% of CEOs have begun a phased plan to bring employees back to work slowly. Re-hiring is just one of a number of areas a small business owner must address to counter an economic recession.
As part of the return to work plan daily temperature screenings (46%) and symptom checks (48%) for employees are being implemented or are being planned to implement. Twenty-three percent plan to continue the remote working of their employees for the time-being.
Other results from the survey are:
- 20% of CEO respondents had dramatic revenue decreases between 25-49%,
- 45% of CEOs expect revenues to rise in the year ahead, but 31% anticipate a decline,
- Profit increases and decreases are nearly the same as 37% of CEOs anticipate increases and 33% anticipate profit declines,
- Testing protocols to be used for employees returning to work:
- Daily temperature taking – 46%
- Daily symptom checking – 48%
- Diagnostic testing for coronavirus – 6%
- Antibody testing – 4%
The Vistage CEO Confidence Index was begun in 2003 and is a survey conducted quarterly of small to midsize business CEOs, presidents, and business owners about the U.S. economy.
Read about COVID-19’s lasting impact on the economy
