Profits expected to rise in 2022, despite workforce and supply chain challenges

Business owners and executives across the U.S. are more confident about the future of their companies than they were a year ago. Significantly more businesses expect to grow revenue and profitability in 2022, despite a broad range of concerns that include rising costs, supply chain disruptions and employee acquisition and retention challenges.

These are among the key takeaways from the 2022 Economic Outlook Survey by The Business Journals in partnership with CIBC. The annual survey, now in its second year, seeks to gauge perceptions of opportunities and concerns facing U.S. businesses and the overall economy in the year ahead.

Conducted in the fourth quarter of 2021, the nationwide study ran in 11 U.S. cities, with business owners and executives representing companies with annual revenue ranging between less than $500,000 to over $100 million. A total of 1,659 owners and executives participated in the study.

While participants reported rising challenges over the next 12 months, overall responses were significantly more optimistic than those gathered one year earlier. Here’s a look at a few of the survey highlights.

Business and economic confidence

Most respondents said they had confidence in their companies’ success. Nearly 75% of those surveyed expect their company’s revenue to increase over the next 12 months, up from 57% in 2021. Increased prices of goods and services and higher real business activity by volume were among the top drivers to this forecasted growth. Other contributors included real profits, financial investments in the business, and increased numbers of employees on payroll.

Business change in 2022 versus 2021

Two-thirds of businesses expect an increase in the prices of their goods and services in 2022 versus 2021

While confidence in their companies was high, respondents did not feel the same about the national economy. Among those surveyed, only 23% were very confident or extremely confident in U.S. economy, showing no improvement over the 2021 survey.

Economic and business confidence over next 12 months

Percentage = Very or extremely confident
 

The hunt for talent

Finding and keeping employees is a real area of concern for businesses. Seventy-eight percent of respondents said finding quality candidates is somewhat or very difficult, up from 61% a year earlier. Still, many said they plan to expand their workforce in 2022, adding professionals in key areas such as product management, administration and business development. They cited increases in production and expansion into new markets as the top reasons for hiring additional employees.