View Page As PDF
Share Button
Tweet Button

Despite concerns about healthcare costs, stiff competition, and government regulations, there is growing optimism about U.S. business conditions in the months ahead. Based on the results of our fifth annual Business Outlook Survey, 78 percent of business owners and executives expect business conditions to improve this year, compared to 65 percent last year and 54 percent two years ago. There is slightly less confidence about business conditions at their own organizations. Seventy-two percent anticipate improvement. As one respondent said, “We are cautiously optimistic about 2015.” 

The Affordable Care Act: Anxiety lingers

Sixty-seven percent of respondents continue to believe the Affordable Care Act (ACA) will have a negative impact on their company’s bottom line. “The Affordable Care Act will continue to provide problems as the corporate mandates begin to go into effect,” wrote one of the respondents. Another went further and said, “We will be forced next year to cancel our health care plan and put our employees out individually to the market place.”

 

Healthcare costs are top of mind

The survey found that increasing healthcare costs are still at the top of the list of challenges facing companies with 49 percent ranking it among their three greatest challenges. Business owners and executives also worry about stiff competition (41 percent), retaining profit margins (40 percent), and government regulations (39 percent). “Significant government regulations are burdensome…,” noted one respondent. Another said, “The economy will continue to remain relatively stagnant as the private sector consumes resources to meet the ongoing increased non-value added regulations coming out of Washington.”

2015
2014
2013
2012
2011
Increasing healthcare costs
49%
46%
47%
43%
39%
Stiff competition
41%
36%
35%
35%
41%
Retaining profit margins
40%
45%
41%
40%
42%
Federal, state and local regulations
39%
42%
35%
39%
36%
Employee issues
24%
16%
15%
15%
20%
High tax rates
17%
22%
27%
17%
17%
Access to credit
14%
13%
13%
16%
  7%
Declining demand for our products/services
12%
13%
15%
16%
13%
Data privacy and cybersecurity threats
10%
-
-
-
-
Federal budget deficit
  9%
16%
32%
24%
19%
Energy costs
  6%
  3%
  4%
  6%
  8%
Inflation concerns
  5%
  8%
10%
11%
14%

 

Attracting the best talent

The improving economy can have some negative consequences. One big concern on a list of executive-related issues is attracting top talent. One employer said, “…a number of employees had previously postponed retirement and are now looking to take the plunge, which will result in higher turnover and increased competition for talent.” Other significant issues are retaining current top talent and key employee succession. Furthermore, there were numerous comments about the challenge of finding skilled personnel for open positions. As one respondent said, “We could see more growth than we are forecasting if we could find the right people to fill our open positions.”

Will employers increase their number of employees in 2015? Just under half of the respondents anticipate a rise in personnel this year.

Is the business community prepared for data privacy and cybersecurity threats?

The answer to this question depends on whether you believe it is sufficient for your company to be “somewhat prepared.” That’s because 70 percent of our respondents believe their organizations are only “somewhat prepared” for internal and external data privacy and cybersecurity hazards. It might cause some angst to learn that another 13 percent are either “not prepared” or “not sure.”

Additional insights

Is the Federal Reserve likely to increase interest rates in 2015?
A significant number—67 percent—said yes.

What kind of tax reform do you believe would be the most beneficial for your business?
Forty percent of respondents said a “25% income tax rate” would be the most beneficial type of tax reform.

Is your business planning to invest in capital in 2015?
Just like last year, 51 percent expect to make a moderate investment in capital, although 12 percent anticipate a significant investment compared to seven percent a year ago.

Are your plans to dedicate more resources to international growth or more to domestic growth?
Resources will primarily be focused on domestic growth with 66 percent planning to dedicate more resources domestically, compared to 55 percent last year.

“800-pound gorilla”

Many participants in the 12-question Business Outlook Survey made comments about continuing uncertainties that impact the business community. “Although it may not impact 2015, there is the 800-pound gorilla in the room when it comes to the way our federal government has fiscally managed our country,” one respondent said. One business owner commented about the increasing hurdles companies face: “The business cycle for many has become more of a roller coaster ride than in the past…” And global threats are also on their minds: “…There are so many threats from outside the U.S. that will affect a stable economy...”

The 2015 Business Outlook Survey was conducted with clients and friends of the firm from January 5 to January 23, 2015.

To read the full report, click here.

If you have questions about our 2015 Business Outlook Survey, please contact:

Carl J. Grassi
President
216.348.5448
cgrassi@mcdonaldhopkins.com

 

COMMENT
+