To say the least, 2019 was a tough year for small and midsize businesses. Between a slow economy, trade conflicts, volatile tariffs and talent wars, CEOs and business owners faced multiple barriers to growth at precisely the same time.
This year, however, seems to be heading in a better direction. The latest Vistage CEO Confidence Index, which captured the sentiments of 1,604 CEOs from small and midsize firms in Q4 2019, turned upward for the first time in seven quarters. Because the Vistage CEO Confidence Index is a proven predictor of GDP six months in advance, this suggests the economy will swing upward by the midpoint of 2020.
Now is the time to start preparing your business for prosperity. To guide that planning, consider these takeaways on economic trends, talent management, technology investments, growth strategies and CEO priorities — all based on data from the Q4 2019 Index and insights from our latest report.
Key insights and recommendations
Insight: Although the economy is expected to rebound in the middle of this year, some industries, verticals and geographies will lead or lag this shift. As a result, business owners may encounter difficulties when trying to time their growth strategy.
Recommendations: Monitor your rate-of-change metrics to get a sense for how your business is tracking with respect to the economy. Meanwhile, start laying the groundwork for your growth strategy. For example, have conversations with your banker now so you have access to capital later. Or invest in technology that will enhance your company’s performance and productivity for the long term.
Insight: The talent war continues to rage on, and the U.S. is still operating at full employment. For small and midsize businesses, this talent shortage may quell future prospects for growth.
Recommendations: Instead of trying to hire people that have the requisite skills and experience, hire people on the basis of cultural fit and train them for the skills they need. In addition, focus on growing the skills and capabilities of your existing workforce.
Insight: Technology is the No. 1 area of investment for small and midsize firms in 2020. However, many business owners find it challenging and expensive to keep pace with technological advancements.
Recommendations: To prioritize your investments, apply the TOP framework: Spend on technology that will transform, optimize or protect your business. To transform your business, focus on changing the behavior of your people while also changing your technology; encourage teams to shift from an analog mindset to a digital-first mindset. To optimize your business, recognize that your company’s digital transformation doesn’t end when a new technology is deployed; instead, it starts the business-process optimization that will incrementally increase your company’s efficiency and productivity. To protect your company, make cybersecurity a top priority. In the Q4 2019 Vistage CEO Confidence Index, nearly one-quarter (22%) of CEOs surveyed said they do not have an active cybersecurity strategy in place.
Insight: High-performing CEOs execute multiple strategies at once, rather than one strategy in particular, to grow and scale their businesses.
Recommendations: Deploy strategies that center on business expansion, innovation and execution to maximize your business growth in 2020. An expansion strategy might include investing in facilities, equipment or headcount to increase your business performance, or it might include adding new salespeople or partnerships to grow your potential. An innovation strategy might focus on creating new products or capabilities, or it might focus on improving everything your business does. A sales execution strategy might mean improving your sales function through better processes, or it might mean strengthening your sales talent through better training.
Identifying your top priorities
While waiting for the economic winds to shift, CEOs and business owners have to both manage the tactical realities of a slowdown and prepare for new opportunities on the horizon. Adding to this complication, leaders have to consider intersecting variables — such as talent management, key investments in technology and diverse growth strategies — when making critical decisions.
In this situation, business leaders have a tendency to set too many priorities. This is problematic, both because it overwhelms the leader and stifles business performance. Having too many priorities is the same as having no priorities at all.
The big takeaway? Limiting your priorities — and focusing on them intently — is a smart move this year. In fact, it may be the single-best way to prepare for prosperity in 2020.
Joe Galvin is the Chief Research Officer for Vistage, the world’s leading CEO coaching and peer advisory organization for small and midsize businesses. In this role, he is responsible for creating the most current, compelling and actionable thought-leadership on the strategic issues facing small and mid-sized business. This research is focused on best practices from the Vistage community, which includes more than 23,000 CEOs, senior executives and business owners in 23 countries.