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Friday, January 27, 2023

Small Businesses Expect a Recession in 2023 » CBIA

Nearly two-thirds of small and medium-sized businesses anticipate a recession in 2023, and many are reassessing their approaches to prepare, according to a new survey.

JPMorgan Chase’s recently released annual Business Leaders Outlook survey reflects how businesses are faring and highlights the growing impact of inflation and workforce challenges.

The report also offers recommendations that companies can implement to further prepare for an economic downturn.

“Businesses are indicating that they have practice in being agile and prepared for many different scenarios, which are key to operating effectively in today’s economy,” said John Simmons, director of banking for middle market and specialty industries at JPMorgan Chase.

economic prospects

The survey found that business optimism is highly dependent on the size of a company, despite similar challenges.

The survey found that just 8% of midsize companies are optimistic about the outlook for the global economy, up from 34% a year ago.

Optimists about the national economy fell from 50% to 22%.

Source: JPMorgan Chase 2023 Business Leaders Outlook

Small business leaders see a brighter picture, with nearly half expressing optimism about the national and global economies.

Despite the uncertainty about the economy, business leaders feel positive about the performance of their own company.

By 2023, 69% of small business leaders expect increased revenue and sales.

Sixty-three percent of midmarket leaders expect higher revenue and sales, with more than half predicting higher profits in 2023.


Concerns about inflation are on the rise this year, particularly for small businesses.

A staggering 91% of midsize business leaders said they are experiencing inflation challenges.

Half of the small businesses surveyed acknowledged that inflation is a challenge this year. Almost all of the reported inflation affected their spending.

Nearly 38% noted that expenses increased by 11% or more, leaving companies with few options.

Source: JPMorgan Chase 2023 Business Leaders Outlook

Eighty-three percent of midsize businesses passed prices on to consumers and buyers, and more than two-thirds (68%) of small businesses increased prices on selected goods or services.

“Inflation has been a challenging headwind affecting companies of all sizes in all industries,” said JPMorgan Chase head of research Ginder Chambless.

“While we have seen some encouraging signs that inflation has begun to moderate and should cool in 2023, companies may still want to consider adjustments to strategies, pricing, or product mixes to help weather the storm in the future. short term”.

Companies have already taken that advice. The survey notes that 82% of midsize businesses are likely to continue raising prices to mitigate costs.

Workforce Development

Despite the rising cost of running a business, companies remain focused on growing their workforce.

“While companies may be cautious on their economic outlook, their stocks show a focus on growth and investing in their employees,” Simmons said.

More than half of the leaders of small and medium-sized companies expect to increase their workforce in 2023.

“While companies may be cautious on their economic outlook, their actions show a focus on growth and investing in their employees.”

John Simmons of JPMorgan Chase

Salary increases are likely to accompany waves of new hires.

Two-thirds of midsize business leaders and 42% of small business leaders plan to increase wages or benefits to attract and retain employees.

Another way employers are working to attract and retain talent is through upskilling. Nearly half of employers said they will offer training and training opportunities for staff.


“After the challenges of the past few years, it’s encouraging to see the resilience of small business owners and leaders,” said Ben Walter, CEO of Chase Business Banking.

“The next economic cycle is always right around the corner, so our role is to help small business owners plan ahead so they can succeed in good times and bad.”

Walter and others at JPMorgan Chase suggest that business owners continue to keep up with economic trends and be flexible about preparing for a recession.

The report recommends that companies “strengthen balance sheets and find opportunities.”

The survey report recommends that small businesses “strengthen balance sheets and find opportunity amid volatility.”

Maintaining working capital is also crucial with today’s economic changes.

The report added that companies should consider supply chain financing and dynamic discount solutions, implement more efficient inventory management, and rework current debt to reduce liabilities.

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