U.S. businesses are beginning to feel ripple effects from the sagging world economy.
While most small and mid-market companies are optimistic about their prospects for 2016, many say they expect challenges increasing their revenue, finding enough talented employees, and managing costs, according to a survey of business executives by JPMorgan Chase released on Tuesday.
The findings are consistent with numerous other surveys that attempt to take the temperature of small and midsize companies, which also indicate steady optimism about 2016, but show less promising results when it comes to expanding operations or adding more employees.
Nearly 70 percent of both sets of business owners said they were optimistic about their company prospects for 2016. Only 27 percent of entrepreneurs and 10 percent of mid-market business executives, however, said they were optimistic about the global economy.
Executives from the mid-market sample are showing more caution about prospects for the U.S. economy for 2016, with 39 percent saying they are optimistic, compared with nearly 70 percent last year, and about 50 percent in 2014.
According to the survey of mid-market executives, the top challenges in the next 12 months are growing revenues, noted by nearly three-quarters of respondents; finding an adequate talent pool, which was mentioned by 40 percent; managing labor costs, also noted by 40 percent; and regulations, a top concern for 31 percent.
With that in mind, nearly half of mid-market company executives said they plan to increase their full-time personnel in the next year, a decrease of about one percentage point compared to both 2015 and 2014.
By contrast, only a quarter of small business owners said they plan to hire more full-time employees in 2016, which is similar to the levels of the prior three years, the survey found. About half of small business owners said growing sales and revenue was their top concern, and uncertainty about economic conditions was noted by about one-third of respondents.
When it comes to managing costs, health insurance was among the top five concerns for small-business owners, noted by 21 percent of entrepreneurs. It topped the list of policy concerns for mid-market companies, with nearly 70 percent reporting it as the top regulatory threat to their business. More than 40 percent of mid-market respondents said their health care costs had increased 10 percent or more in the past year.
"Executives are incrementally more cautious than they were a year ago, but the backdrop remains generally constructive," John Simmons, JPMorgan Chase's head of middle market banking and specialized industries, said in the report.
JPMorgan Chase surveyed executives at 1,394 middle market companies and 950 small businesses between January 2015 and February 2016. It defines mid-market companies as those with revenue between $20 million and $500 million.