Now that we’re halfway through 2018, it makes good business sense to ask: What is the state of the U.S. economy, and what economic conditions should small and midsize businesses (SMBs) anticipate for the remainder of the year?
The answer to the first part of that question is clear. The U.S. economy is strong, and many businesses are feeling good about their growth prospects. According to Vistage’s most recent survey of SMB CEOs, most chief executives anticipate that their revenue and profits will continue to increase in the next 12 months. The Vistage CEO Confidence Index, which measured 104.1 in Q2 2018, is also close to its 10-year high.
That said, the future is less certain. New economic risks are cropping up that could pose problems for SMBs, slow the growth of the U.S. economy or even tip us into a recession. Our new report, Decision factors for H2 2018: Economic considerations for SMB executives, describes these economic risks and offers recommendations to help CEOs manage them. I strongly encourage you to read it.
At the very least, consider these factors when making decisions in the second half of 2018:
- The rising cost of everything. Expect that rising costs will force you and every other company to raise prices. Massive government debt and a growing deficient will drive more government borrowing, which will only fuel the inflation furnace.
- The talent war is reaching new levels. The talent crisis is already throttling growth. Workers are in high demand at all levels — from factory-floor workers to corporate cube-dwellers to managers, executives and leaders. Competition for talent is high, which means that your best people are already being recruited. Retaining your superstars should be a top priority.
- Taxes, trade and tariffs. The new tax law, along with radical shifts in trade policy and tariffs, means that the legal and financial landscape is rapidly evolving. The impact and outcome of these shifts is highly unpredictable, so make sure you stay on top of them and consider the implications for your business.
- Cyberattacks. Cyberthreats are a clear and present danger for every SMB. As sudden as a heart attack, a cyberattack can compromise your computers, highjack your wire transfers, or steal customer, employee and financial data. If you don’t defend your digital assets, you will expose your business to a ruthless hacker.
A wise man once said, “Enjoy the sunshine, but prepare for rainy days.” That advice feels apropos for the current state we’re in. SMB CEOs should take advantage of the current low interest rates and access to capital — using this time to make key investments in technology, equipment and people — while still staying attuned to the fact that a recession could be around the corner. In other words, enjoy the good old days while they’re still here.