According to SunTrust’s annual Business Pulse Survey of leaders at more than 500 companies, businesses are looking toward the future with cautious optimism. While businesses are currently less likely than previous years to identify either the global or domestic economy as strong, 73 percent rated their own firms as strong.
Businesses are looking to increase revenue and profitability and explore possibilities for expansion. From goal-setting and challenges to financial planning and alternative earning strategies, here’s how attitudes and practices have shifted over the past three years.
Goal-setting to make growth a reality
The majority of companies (72 percent) engage in financial goal-setting for their business, with 53 percent of companies developing an official 5-year financial plan. Year-over-year, short-term goals have consistently focused on increasing revenue, increasing profitability and reducing expenses.
“Increasing revenue” has remained the top overall goal for businesses from 2017 to 2019, although a smaller percentage of leaders see this as their main priority. The leaders who do still identify this as their business’s top goal, however, are becoming more confident that they will be able to meet it.
Barriers to accomplishment
Most companies actively review long-term financial goals at least once or twice per year.
So what can stand in the way of meeting those goals? Businesses consistently recognize three top challenges: Time constraints, internal conflicts, and prioritizing responses to short-term threats.
However, the top challenge has changed in each of the past three years. In 2019, businesses struggled the most with the need to focus on short-term threats instead of long-term financial planning. This data is consistent with this year’s growing uncertainty about global and local economic strength: Many businesses may be unable or unwilling to forecast in a less stable environment.
New strategies to fuel earnings
For the past several years, businesses have consistently noted their top long-term earning strategies focus on organic business growth, such as introducing products or attracting new customers. So what are some of the alternative strategies business are using to fuel growth?
There have been consistent year-over-year increases in businesses seeking out mergers (which has risen from 6 percent in 2017 to 17 percent in 2019), as well as closing a division or location (from 7 percent to 12 percent). Other strategies on the rise include acquiring or buying out a company and taking steps to become publicly traded.
Building a solid financial plan, identifying and overcoming barriers, and developing creative earnings strategies can all help drive growth for your business.