Persistent challenges stemming from COVID-19 remain, but according to First Business Bank’s annual survey, business executives in the Northeast Wisconsin area and around the state are feeling optimistic about what lies ahead.
The Business Statistics & Trends Survey received responses from 305 business leaders in Northeast Wisconsin, Southeast Wisconsin, Greater Dane County, and Kansas City Metro. It was completed amid ongoing recovery efforts that were undermined by this summer’s pandemic resurgence.
Despite this, 46% of survey respondents across all markets reported better-than-projected results in 2021, and 20% said their businesses performed worse than projected.
The business climate in Northeast Wisconsin experienced major improvements in 2021. The percentage of survey respondents whose overall business performance fell short of expectations dropped steeply from 43% in 2020 to just 16% this year, while 51% did better than expected (up 15 percentage points over the previous year).
Performance below expectations was largely attributed to a supply and talent shortage, as well as higher operating costs. The Paycheck Protection Program (PPP) was the top reason for better-than-expected performance, followed by increased prices, with improved internal efficiencies a distant third. Diversifying client base was the top strategy implemented in 2021, which is expected to continue in 2022. Companies are also favoring strategies that entail investments in leadership training and expanding the workforce.
“Finding strong talent continues to be a challenge in Northeast Wisconsin, but with all metrics expected to improve, businesses have good reason to feel that they will stay on track to meet their goals next year despite persistent issues,” said Rick Hearden, president of First Business Bank’s Northeast Wisconsin market. “It’s no secret that we’re still in an unusual business cycle. Companies that cross-train their employees to improve their professional dexterity and stay creative in their approach to innovation will be better positioned to succeed.”
Sales & Profitability
In 2020, the same percentage of companies reported an increase in sales as a decrease in sales (38%). The situation improved dramatically in 2021, as just 13% saw a sales decrease while 72% reported higher sales.
Big year-over-year swings are also noted in profits. About one-quarter of respondents (23%) in Northeast Wisconsin businesses reported lower profits (down from 40%) and 58% increased profitability (up 20 percentage points from the previous year).
Hiring & Wages
Although 24% of respondents reported a workforce reduction and 12% a wage reduction in 2020, those figures were cut by around half this year — 13% saw workforce decreases and a mere 5% reported lower wages. At 48%, workforce increases were up 28 percentage points from 2020, and wage increases jumped 29 percentage points to 79%.
Expectations for 2022
The reported outlook for 2022 and beyond is quite positive. Overall, 70% of survey respondents expect their businesses to perform better in 2022 than in 2021 and 24% expect the same performance next year. Only 6% expect worse performance.
Looking ahead, 6% expect lower profits in 2022 and 65% project an increase in profits — both of which reflect improvement over the previous year. Respondents also expect this year’s trends in hiring and wages to continue in 2022, with increases in those metrics expected at 69% and 79%, respectively.
Other notable statistics include:
- Just 4% project a sales decrease in 2022 (down from 17%).
- 84% of respondents expect high sales in 2022, up steeply from 60% the previous year.
- Only 4% of companies project a workforce decrease and 2% project lower wages.