Launched in 2019, Umpqua Bank’s business barometer report provides an insight into how business leaders have orientated themselves in an unprecedented period that includes the pre-COVID economy, the onset and initial recovery of the pandemic and the current environment of rising inflation and interest rates. In this context, Umpqua Bank’s business barometer for 2022 reveals important differences from previous years. This year, he found that more small companies are ready than ever to make significant changes to their business in response to the growing impact of inflation. Meanwhile, after two years of making major business changes in response to the pandemic, mid-market companies are now facing increasing impacts and higher labor force transformation costs and threats to cybersecurity.
“The last few years have been a remarkable period of disruption and resilience for American business,” said the president of Umpqua Bank. Tori Nixon. “The economic environment before the pandemic of low inflation, cheap capital and high growth has shifted and we are in a period of rising costs for goods, talent and capital. With this new reality, small and medium-sized companies are applying the lessons learned over the last few years and adjusting their strategic focus to ensure that they are stronger and more competitive on the other side. “
The main findings and highlights of the Umpqua Bank report for 2022 include:
After two years of successful turnovers, the reset of the middle market for the transformation of the workforce
Mid-market companies account for only 3% of all US businesses, but they do $ 6 trillion in GDP and 44 million jobs. After major strategic changes over the last two years, the leaders of these businesses expect less need to deal with previous areas of focus, including: pricing models (-15 percentage points), products and services (-16), acquisitions (- 16) or merger (-12), expansion of funding (-12) and digitalisation for efficiency (-5).
Instead, mid-market companies are shifting their focus to tackling the transformation of the workplace and the accompanying labor shortages, which continue to accelerate. Nearly three quarters (72%) reported difficulties in finding qualified staff, an increase of 17 percentage points over last year, with a new impact on the growth of 33% of business (+16 percentage points). More than 30% also have difficulty retaining employees, up 18 points. In response, leaders plan to be even more aggressive than last year in offering more flexibility with remote options (+16), giving bonuses or other incentives (+15), supporting working parents (+14), increasing pay or benefits (+11) and find ways to automate repetitive manual tasks (+8).
“Mid-market companies have done a great job of directing their business to adapt to the supply chain and other challenges to become even more efficient and competitive in the last few years,” he said. Richard Cabrera, Umpqua’s Head of the “Middle Market Banking” Department. “Now they are striving to apply the same strategic focus and creative energy to the challenging workforce environment that has the most immediate impact on the end result and affects growth.”
Small businesses are ready for the most significant business changes since the pandemic
Smaller companies often have fewer levers to pull in response to disruptions than larger companies, and previous Business Barometer reports are more reluctant to accept big changes. This year this trend has reversed. For the first time, small businesses are striving to make more significant changes in their business, especially compared to a year ago. The changes that small businesses expect include: pricing models (+18 percentage points), products and services (+12), funding expansion (+7), efficiency digitalisation (+5) and acquisitions (+4) or mergers (+3).
In the face of continuing labor and supply chain disruptions, more small businesses last year said they were planning aggressive actions to hire new skills to build skills (+13), increase wages and workers’ benefits (+12). , allow remote operation options (+2), find new suppliers (+12) and identify other supply chain impact management partners (+4).
“Small businesses are increasingly feeling the urgency to make changes in their strategies and operations, especially in response to rising inflation, which has a more immediate impact the smaller the business,” they said. Ashley Hayslip, Umpqua’s Head of the Public and Business Banking Department, “This sense of urgency can become a competitive advantage for those businesses that are spinning fast and strategically.”
Economic optimism is declining, but expectations for business growth remain stable
Last year’s economic optimism surpassed pre-pandemic levels as businesses awaited recovery. In 2022, this optimism has waned as fears increase that rising inflation, which ranks as a major concern for both the small (73%) and medium-sized markets (37%), and the evolving impacts of the chain disruption for supplies and labor shortages are here to stay. In terms of economic conditions, businesses are divided. Leaders surveyed this year are as likely to say that current conditions are bad as well as excellent or good (34%).
The economic prospects of leaders vary considerably depending on the size and complexity of the business. Nearly 46% of small businesses believe that the economy will decline further, an increase of almost 20 percentage points in 2020 and 2021. However, more than eight out of 10 companies in the mid-market believe that the economy will improve (31% ) or will remain the same (50%), which is very similar to their predictions before the pandemic. This difference in expectations may explain the greater urgency on the part of small businesses to adopt significant changes this year.
It is important to note that although leaders take a more cautious view of the overall economy, this does not mean a lack of confidence in their ability to adapt and continue to grow their business. When asked about revenue growth and profitability, businesses expect levels of increase similar to previous years.
Cybersecurity is a major concern for mid-market companies
A remarkable 45% of mid-market companies report being subjected to cybersecurity scams in the last 12 months. Of all the possible answers, cybersecurity ranks as the leading area in which mid-market businesses are likely to invest this year, and as the second most important area to tackle next year, after tackling labor challenges. . Middle market leaders also clearly see the need to protect working capital and financial assets. More than six out of 10 plan to invest in financial instruments and infrastructure that protect and strengthen their payment systems.
The impact of the supply chain is increasing for small businesses, moderate for the medium market
This year’s report shows the dramatic progress made by mid-market companies in aggressively tackling supply chain disruptions. In the last year, 60% have applied new inventory management techniques (+24 percentage points), 54% have diversified with new products (+14) and 51% have found new suppliers (+9). As a result, related impacts have improved compared to 2021. Nearly 80% have been able to purchase basic necessities (+8) and, despite inflationary pressures, related costs have risen less dramatically than a year ago.
In contrast, the effects on the supply chain are intensifying for smaller enterprises compared to last year, especially in terms of the price of goods purchased, with 90% experiencing price spikes, 75% experiencing longer delays (+16 ) and 61% have to deliver materials differently (+15). Inflation is the main concern for almost three quarters of small businesses, which are less able to bear the rising cost of goods.
To read and download the full survey, visit www.umpquabank.com/business-barometer.
The Umpqua Bank 2022 business barometer, conducted annually, surveys 1,210 owners, executives and financial decision makers from small and medium-sized companies in the United States. The online survey was conducted in partnership with DHM Research, a public policy and business research firm, and targeted leaders in companies with $ 500,000 to $ 500 million in annual revenue. The study has a 2.8% margin of error and was submitted by From April 13 to April 26, 2022.
About Umpqua Bank
Umpqua Bank, headquartered in Roseburg, Ore., Is a subsidiary of Umpqua Holdings Corporation and operates in Arizona, California, Colorado, Idaho, Nevada, Oregonand Washington. Umpqua Bank is recognized for its innovative customer experience and banking strategy by national publications, including The Wall Street Journal, The New York Times, BusinessWeek, Fast Company and CNBC. The company has been recognized by FORTUNE magazine as the “100 Best Job Companies” in the country for eight consecutive years and was recently named by the Portland Business Journal the most respected financial services company in Oregon for the 17th consecutive year. year. In addition to its presence in retail banking, Umpqua Bank also owns Financial Pacific Leasing, Inc., a nationally recognized commercial finance company that leases business equipment.
SOURCE Umpqua Holdings Corporation