Forecast

"I've had clients pointing to September 11, 2002, and saying they want to be up and rocking by that date," says Pete van der Harst, CEO of Portable Church Industries, a company in Madison Heights, Mich., that provides equipment and operational advice to churches. "I'd say at least 50% of the folks are starting to say, 'Enough of this whimpering around." Indeed, van der Harst's own mood has improved considerably during the past two months; in June he had been reporting "serious concerns" about the viability of his business.

He's not the only one who says things are looking up. In this installment of Inc's ongoing quarterly survey, 74% of van der Harst's fellow Inc 500 CEOs predicted an increase in yearly sales for 2002 versus 2001, while 63% reported a sales jump from the first quarter of 2002 to the second quarter. What's more, a whopping 85% of respondents said they were planning to hire new employees in the remainder of 2002. Nor are the Inc 500 CEOs alone in their mostly sanguine outlook. Some 75% of business owners recently surveyed by D&B said they were optimistic about the economy for the rest of the year, while 63% of respondents to a survey by business-network organization TEC International were projecting an increase in sales in the next 12 months. If the economy depends on growth companies to lead a recovery, as it often has in the past, the polling results are good news for everybody.

At the same time, van der Harst believes the recovery will be gradual. "The third quarter will not make up for the first quarter of this year," he says. "There is some business that I think will have disappeared forever." Such mixed feelings are representative of this quarter's survey results: 62% of respondents say the economy is still in recession, and 34% expect the downturn to last another year or more. "Everything's going better now, but it's been awfully challenging this year," says Jon Bryan, CEO of Business Integrators Inc., a systems integrator in Houston. "We've made money every month, but we haven't really made enough to stand up and shout about."

Despite the caution, most of the news from Inc 500 CEOs remains upbeat. The number of survey respondents who have serious concerns about their businesses' viability has dropped considerably, down to 8% from a startling 18% in last December's survey. More than two-thirds of the respondents call their cash-flow situation "normal" and say they're paying their bills on time.

And then there are those plans for job growth. You could write them off as cockeyed optimism, except that the leading edge of the labor market -- temporary staffing -- is already rebounding. Eugene Lupario, CEO of Silicon Valley Staffing Group, a $15-million company located amid the dot-com wreckage in Emeryville, Calif., says his business is picking up. "It doesn't seem like a lot of people are talking about laying people off anymore. They may have actually overkilled, and now they need some temps," he notes. Chris Bush, of Ryder-Bush Staffing, in Dallas, agrees. "It was like somebody switched on a light on January first and the phone started ringing," he says. "I anticipate that the temp business will be the strongest it's been in several years throughout this year." A recent Federal Reserve study bears him out: it showed increased temp hiring in Boston, Philadelphia, Atlanta, and Richmond, Va.

Of course, a few bumps could run even the most optimistic of companies off the road. Another international incident, continued stock-market slippage, or a few more high-profile executive arrests could stall the entrepreneurial economy. "There are a lot of ifs out there. If we have another terrorist attack, people will start zipping up tight," says Jon Bryan. So prediction is as hazardous as ever. But if growth companies' hopes and plans are indicative, we're firmly on the road to recovery. We just have to hope it doesn't have too many potholes.

Business Viability
Do you have serious concerns about the viability of your company?
December 2001 March 2002 June 2002 September 2002
Yes 18% 14% 12% 8%
No 77% 83% 85% 90%
Don't know 5% 3% 2% 2%
Sales Expectations
How do you think your 2002 revenues will compare with 2001's?
Up more than 20% 48%
Up less than 20% 26%
Flat 11%
Down less than 20% 9%
Down more than 20% 6%
Hiring Plans
Do you plan to hire any new full-time
employees in the remainder of 2002?
Yes 85%
No 15%
Do you plan to make any layoffs
in the remainder of 2002?
Yes 9%
No 91%

For this project Inc teamed with Inquisite?, the survey product group of Catapult Systems, an Inc 500 company. Inquisite (www.inquisite.com) provided the survey technology, reporting, and hosting for the on-line survey.


The Whole New Business Catalog

Search: He Said, She Said
Forecast: Picking Up Speed
Cheat Sheet: Eminent Domains
Contrarian Thinking: Extra! Extra!


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To read more findings, see "September Forecast Extra."