Survey Finds CA Businesses Optimistic About Revenue & Growth

In a year filled with unforeseen and unparalleled challenges, small and midsize U.S. business leaders are showing resilience by remaining nimble, shifting operating models and using lessons learned to plan for continued economic uncertainty, according to JPMorgan Chase’s annual Business Leaders Outlook survey.

While the majority of businesses surveyed across the U.S. cited continued economic uncertainty as their top challenge, the survey found that midsize companies in California are more optimistic about their industry’s performance (68%), compared to the rest of the country (61%). Beyond that, compared to the national average, midsize companies in California are also more likely to expect their revenue and sales to grow in 2021 (74% vs. 69% all U.S.).

This year, almost half (47%) of midsize companies in California are planning to increase domestic personnel and 50 percent plan to increase employee compensation, which is roughly in line with the national average (45% and 52% all U.S. respectively).

“Businesses have weathered many storms over the past year, displaying impressive levels of creativity and adaptability as they shifted to new operating models, distribution channels and technologies,” said Jim Glassman, head economist, JPMorgan Chase Commercial Banking. “The challenges aren’t over, but their tenacity has helped sustain economic momentum and offers optimism for recovery in 2021.”

Businesses responded to 2020’s economic realities by adapting their operating models and strategies to maintain success in the new environment, including:

• Shifting Online: In response to the pandemic, California midsize companies are more likely to have changed their operating models to be more online (51% vs. 41% all U.S.).
• Shifting to Remote Work: The majority of midsize (84%) and small (72%) U.S. businesses have moved some or all of their workforce to remote work over the past year.
• Building up Cash Buffers: Nearly two-thirds (65%) of midsize businesses and one-third (31%) of small businesses across the U.S. have increased cash reserves as a cushion for potential future disruptions, with 33 percent of small businesses expecting to save more in 2021.
• Digitizing Payments: More than half (56%) of U.S. midsize businesses have increased their usage of online banking and treasury tools, including electronic payments. Small businesses have moved towards contactless payment options, with 23% already implementing them and another 20% expecting to do so in 2021. Over one in 10 small businesses (14%) have changed their business model to have 100% of sales come from e-commerce in 2020, with 12% planning to do so in the year ahead.

Moving swiftly into 2021, businesses should keep in mind the following considerations:

1. Prepare for Some Bumps in the Return to Normal: COVID-19 has created a volatile business cycle with sharp downturns and quick but uneven recoveries. As businesses adapt to the new economic landscape, they should have strong contingency plans in place that can be quickly activated.
2. Embrace Technology: While implementing new digital banking tools and processes may seem time-consuming, many can be implemented quickly and easily, providing benefits that include improved data and insights, future-proofed systems and increased operational efficiency.
3. Remain Vigilant: As companies support greater remote work capabilities and digital processes, they should develop additional business resiliency strategies to maintain controls, counter rising cyber threats and avoid disruptions to their new work environments.

JPMorgan Chase’s Business Leaders Outlook survey was conducted online from November 11-24, 2020, for small businesses and from November 13 to December 1, 2020, for middle market companies.