Amid Economic Uncertainty, Businesses Embrace Change, Strengthen Resolve, JPMorgan Chase Survey Finds

In a year filled with unforeseen and unparalleled challenges, small and midsize U.S. business leaders are showing resilience by remaining nimble, accelerating digital adoption and using lessons learned to plan for continued economic uncertainty, according to the annual JPMorgan Chase Business Leaders Outlook survey released today.

While the majority of businesses surveyed cited continued economic uncertainty as their top challenge, most – 77% and 63% of midsize and small businesses, respectively – remain optimistic about their own performance in the year ahead, even as they continue to face the impacts of a global pandemic.

Still, fewer small businesses anticipate revenue and sales growth for the year ahead, down to 47% from 60% last year. The outlook for midsize businesses is a bit brighter: 69% expect to see revenue and sales growth in 2021, relatively unchanged from 70% a year earlier and before the start of the pandemic.

“Businesses have weathered many storms over the past year, displaying impressive levels of creativity and adaptability as they shifted to new operating models, distribution channels and technologies,” said Jim Glassman, head economist, JPMorgan Chase Commercial Banking. “The challenges aren’t over, but their tenacity has helped sustain economic momentum and offers optimism for recovery in 2021.”

Meeting Changing Realities: Businesses responded to 2020’s economic realities by rapidly adapting their operating models and strategies to maintain success in the new environment, including:

• Shifting to Remote Work: The majority of midsize (84%) and small (72%) businesses have moved some or all of their workforce to remote work over the past year.
• Building up Cash Buffers: Nearly two-thirds (65%) of midsize businesses and one-third (31%) of small businesses have increased cash reserves as a cushion for potential future disruptions, with 33% of small businesses expecting to save more in 2021.
• Digitizing Payments: More than half (56%) of midsize businesses have increased their usage of online banking and treasury tools, including electronic payments. Small businesses have moved towards contactless payment options, with 23% already implementing them and another 20% expecting to do so in 2021. Over one in 10 small businesses (14%) have changed their business model to have 100% of sales come from e-commerce in 2020, with 12% planning to do so in the year ahead.
• Identifying new Paths to Capital: Nearly half (44%) of small businesses have explored online lending in the past year, with 25% procuring an online loan. For the upcoming year, 56% say they would be open to procuring an online loan if they find themselves in need of capital.

“Businesses were forced to make new and unexpected pivots last year, including accelerating their adoption of new processes, technology and contingency plans,” said John Simmons, head of Middle Market Banking & Specialized Industries at JPMorgan Chase. “Companies best positioned for success in 2021 will be those that focus on remaining nimble amidst continued volatility and evolving consumer demands.”

Facing the Unknown: COVID-19 and the disruptions it’s caused have created a backdrop of economic uncertainty, which 61% of midsize and 47% of small businesses listed as the top challenge they’re facing.

• Generating sales and revenue growth remains a key challenge for midsize and small businesses, with 42% of midsize and 34% of small business leaders citing it as a concern.
• Amid economic uncertainty, employment projections declined modestly compared to previous years: 45% of midsize businesses and 34% of small businesses expect to increase full-time personnel in the next year. A limited supply of qualified candidates remains the top challenge to hiring for midsize businesses and is increasingly becoming a major concern for small businesses.

Fighting Fraud: Nearly all (96%) of midsize and two-thirds (66%) of small businesses report taking actions in preparation for potential cyberattacks. Across both midsize and small businesses, employee education and training programs mark the most widely used tactic. More than half (55%) of midsize businesses report developing proactive counter measures, such as deploying technology against potential cyber-related disruptions, up from 47% a year before.

Defining New Values: In addition to operational shifts, 47% of small business leaders say their core business values have changed since the start of the pandemic. The most common shifts include placing a greater value on their community, relationships with employees and digital solutions for their businesses.

“Like many of us, the events of the past year have shaped many small business owners’ perspectives about what’s most meaningful to them,” said Business Banking CEO Jennifer Roberts. “Business leaders have a deeper appreciation for quality time with family and friends, and the importance of good health for themselves, their employees, and their community. These are likely to be permanent mindset shifts.”

Planning For the New Year:

Businesses should keep in mind the following considerations as they prepare for 2021:

1. Prepare for Some Bumps in the Return to Normal: COVID-19 has created a volatile business cycle with sharp downturns and quick but uneven recoveries. As businesses adapt to the new economic landscape, they should have strong contingency plans in place that can be quickly activated. Learn more here.
2. Embrace Technology: While implementing new digital banking tools and processes may seem time-consuming, many can be implemented quickly and easily, providing benefits that include improved data and insights, future-proofed systems and increased operational efficiency. Learn more here.
3. Remain Vigilant: As companies support greater remote work capabilities and digital processes, they should develop additional business resiliency strategies to maintain controls, counter rising cyber threats and avoid disruptions to their new work environments. Learn more here.

For more information on the Business Leaders Outlook, please view the midsize and small business reports.

Survey Methodology

JPMorgan Chase’s Business Leaders Outlook survey was conducted online from November 11-24, 2020, for small businesses (annual revenues between $100,000 and $20 million) and from November 13 to December 1, 2020, for middle market companies (annual revenues between $20 million and $500 million). In total, more than 2,100 business leaders in various industries across the U.S. participated in the survey. For year-over-year trends, current data is compared to data collected in the first quarter of previous years. The results of this online survey are within statistical parameters for validity, and the error rate is plus or minus 2.5% for the small business findings and plus or minus 3.0% for the midsize business findings, both at the 95% confidence level.

About JPMorgan Chase

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $3.2 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

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