Business leaders focused on efficiency, reducing uncertainty,
protecting working capital
- 74% focused on digitization to become more
efficient
- 60% investing in tools to protect payments systems
- 57% of middle market businesses likely to bring supply
chains back to U.S.
- Cybersecurity surpasses talent issues as a top middle market
company concern
LAKE OSWEGO, Ore.,
Sept. 19,
2023 /PRNewswire/ -- Umpqua Bank, a subsidiary of
Columbia Banking System Inc. (Nasdaq: COLB), today announced
the findings of its annual Business Barometer ― an in-depth study
of the mood, mindset, and strategic priorities of small and middle
market businesses across the U.S. While concerns about the
direction of the economy persist, business optimism is rising, and
expectations for revenue and profitability are increasing. The
study also found a growing appetite among businesses to make
prudent investments that will help them become more efficient and
competitive.
"Small and middle market businesses across the country continue
to show why they are the backbone of the U.S. economy," said
Tory Nixon, Umpqua's President of Commercial Banking.
"While economic concerns linger, they're responding to the
uncertainty with growing optimism and confidence in their ability
to adapt and move forward. Businesses are planning strategic moves
they believe will help them become more efficient, more profitable,
and ready for what's ahead."
With positivity about the current state of the economy (41%
excellent/good), and expectations for increased revenue (58%) and
profitability (51%) hovering around or exceeding five-year highs,
businesses are noticeably more likely than last year to take
planned action to achieve their goals in the next 12 months. This
is especially true of middle market businesses, which are more
likely to invest in digitization for efficiency (87%) and tools to
protect payments systems (74%), make significant changes to
products and services (65%), expand their commercial real estate
footprint (57%), finance expansion (49%), or acquire another
business (40%).
Although businesses are cautiously more optimistic about the
economy than in 2022, a majority believe an economic downturn is
more likely now than they did at the beginning of the year. In
order, all businesses surveyed rate inflation, a potential
recession, and high interest rates as their top three concerns.
Other notable findings from this year's Business Barometer
include the following:
Key Investments Target Efficiency over Aggressive
Growth
Businesses are focused on becoming more efficient in
the year ahead. Outside of increasing revenue and sales, improving
operational efficiency ranks as the most "crucial" factor to
success. Nearly 3 in 4 enterprises plan to invest in digitizing new
areas of their business to improve efficiency. Middle market
companies are especially focused on increasing efficiencies through
automation, which ranks as the "most important" action to manage
profitability in the next 12 months, as well as a top investment
priority.
The majority of those surveyed, including 65% of middle market
businesses, are likely to make significant changes to products and
services this year, with the goal of increasing profitability as a
key motivator. To protect working capital, 60% of businesses are
also likely to invest in financial tools to protect their payments
systems, including 74% of middle market companies.
"Leaders are less focused on wholesale changes to their business
right now and more focused on shoring up their fundamentals,"
said Umpqua's Head of Middle Market Banking Richard Cabrera.
"Those enterprises with a sound business model, lean and efficient
operations, and strong financial management will be well-positioned
over the next 12-18 months for continued success and future
growth."
Businesses in West More Optimistic Right Now than Other
Regions
The West, with closer geographic ties to
Asia, a vast agriculture industry,
and a leading technology hub, records significantly higher marks of
optimism than other regions. This year, 57% of business respondents
based in the West rate the economic conditions in the U.S. as
either excellent or good compared to 33% in the Midwest, 39% in the
South, and 36% in the Northeast. When asked whether they anticipate
that overall economic conditions in the U.S. will improve in the
next 12 months, 46% of businesses in the West believe economic
conditions will improve, 33% in the Midwest, 39% in the South, and
34% in the Northeast.
This higher level of optimism is underscored by the fact that
42% of businesses in the West say they are likely to hire and
increase staffing levels in the next 12 months. This compares
to 33% of businesses in the Midwest, 39% and 36% of businesses in
the South and Northeast, respectively.
Cybersecurity Now Top Non-Macroeconomic Concern for Middle
Market Businesses, Ahead of Talent Issues
Of those surveyed,
22% of middle market leaders see addressing cybersecurity as
crucial to their success in the next year. Overall, they also rank
cybersecurity as the top concern after inflation and
recession—ahead of talent acquisition and retention this year. In
the past 12 months, 21% of middle market businesses surveyed
indicate they have been the target of cyber-related
fraud and ransomware attacks.
Supply Chain Boomerang: Nealy
Half of Middle Market Business Bring Supply Chains Back to
U.S.
Close to half of middle market businesses (49%)
surveyed have brought supply chains or manufacturing back to the
U.S. in the past 12 months. Another 57% indicate they will likely
continue that trend in the year ahead. When asked why, the top
three reasons are: (21%) more profitable, (11%) increased control,
and (11%) best opportunity to grow business.
Commercial Real Estate Holds Steady as Businesses Eye
Opportunities
Appetite for expanding commercial real estate
is holding steady. Middle market companies are more likely than
last year to consider expanding their real estate footprints in the
next 12 months (2023: 57% and 2022: 39%). Among small business
owners, 35% indicate they are likely to invest in expanding their
real estate footprints.
Businesses Plan to Continue Hybrid Options for
Workers
For industries not constrained by in-person
services, hybrid schedules remain the norm. More than half of all
businesses surveyed offer consistent hybrid work options for
employees, including 1 in 3 allowing remote days most of the week,
and 1 in 5 allowing a full five remote workdays. While a solid
majority (55%) plan to maintain their current approach over the
next year, 22% actually plan to expand remote work options,
including 28% of middle market businesses, compared to 17% planning
to scale back.
Methodology
On behalf of Umpqua Bank, DHM Research
conducted an online survey of 1250 owners, executives, and
financial decision-makers of American small and middle market
companies during July 27 to August 8,
2023. 22% of middle market respondents are minority-owned
while 23% of small business respondents are certified woman-owned
and 17% minority-owned. The margin of error is: ±2.8%.
About Umpqua Bank
Umpqua Bank is a subsidiary of
Columbia Banking System Inc., (Nasdaq: COLB) and a premier regional
bank in the Western U.S., with offices in Oregon, Washington, California, Idaho, Nevada, Utah,
Arizona and Colorado. With over $50
billion of assets, Umpqua
combines the resources, sophistication and expertise of a national
bank with a commitment to deliver personalized service at scale.
The bank consistently ranks as one of America's Best Banks (ranked
by Forbes) and supports consumers and businesses through a full
suite of services, including retail and commercial banking; Small
Business Administration lending; institutional and corporate
banking; equipment leasing; and wealth management. The bank's
corporate headquarters are located in Lake Oswego, Oregon.
Learn more at https://www.umpquabank.com.
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