SAN DIEGO, California — The confidence of small and midsize business (SMB) CEOs in the economy has taken a hit in Q1 2023, according to Vistage’s latest CEO Confidence Index. The survey reveals that CEOs are growing increasingly concerned about the potential impact of rising costs due to inflation and interest rate hikes on their businesses.
Vistage, a CEO coaching and peer advisory organization, has found that the Confidence Index fell to 72.6 in Q1 2023, down from 75.3 in Q4 2022 and 73.4 in Q3 2022. This decline has erased the modest gains seen in the previous two quarters and is significantly lower than the post-pandemic high of 108.8 recorded in Q2 2021.
The survey highlights that only 9% of SMB CEOs reported economic improvement over the past year, and just 9% expect the economy to improve during the coming year. Moreover, 53% of CEOs anticipate the economy to deteriorate in the next 12 months.
As a result, many business leaders are delaying or scaling back investments and focusing on cost-cutting measures to navigate the uncertain economic environment. The survey found that 30% of SMB CEOs plan to increase total investment expenditures in the next 12 months, down from 36% in Q4 2022 and 45% from last year. Additionally, 54% expect to increase hiring in the coming year, down from 65% in the previous year.
Cost-cutting measures are also on the rise, with 30% of CEOs having already implemented such measures, and another 28% planning to do so within the next six months. Some of the cost-saving strategies include delaying or reducing capital expenses (54%), sourcing new vendors and suppliers (51%), reducing their workforce or postponing hiring (50%), discontinuing unprofitable products or services (42%), and decreasing sales and marketing efforts (13%).
Despite the concerns surrounding the economy, the survey found that profit and revenue expectations remain relatively stable. 43% of SMB CEOs anticipate higher profits in the coming year, slightly below last year’s 44% and well below the 61% reported two years ago. Meanwhile, 55% expect increased revenues in the coming year, down from last year’s 68%.
