“Business as usual” is not a growth strategy. In today’s ever-changing landscape, businesses must adapt, adopt, and evolve or get left behind. To do so, regional executives will need accurate intel and analysis to make smarter, more informed business-building decisions.
While this kind of information should come from a variety of sources, it is most important to get the information and perceptions of fellow business leaders. EKS&H’s 2016 Business Outlook Survey does just that. It provides critical insights that can help serve as a precise GPS to avoid pitfalls and risks while sharing forward-thinking strategies for businesses in Boulder, Longmont, and northern Colorado.
In its 10th year, the EKS&H’s Business Outlook Survey has become an informative resource for middle market companies throughout Colorado. Based on our 2016 survey, regional business owners and leaders foresee a better year than their national counterparts. In fact, regional economic optimism increased 2.2%, while the national economic optimism decreased by 1.0%.
This outlook factors in the previous year’s reported performance and this year’s planned strategies. It’s an amalgamation of more than 250 C-level executives who shared pragmatic perspectives on expectations and outlooks for their businesses, which represent a variety of industries, including construction, financial services, healthcare, manufacturing, and technology. Respondents are asked about their previous year’s performance along with opportunities and challenges for the coming year. A few of our key findings include:
- Fewer businesses increased employment and capital spending in 2015 than the previous year.
- In addition, significantly fewer businesses reported higher operating expenses in the previous year.
- While 62% of businesses grew revenue and 53% grew profits in 2015, this is significantly down from the prior year.
In terms of business performance, many respondents presented 2015 as positive, if not as robust as some had expected. The good news regionally, in Boulder and Fort Collins, is that area respondents conveyed a more favorable picture for the local economy in the previous and current year.
In 2015, a greater percentage of respondents in Boulder and Northern Colorado indicated revenue growth, while a great percentage of Boulder respondents indicated employment growth.
For 2016, a greater percentage of respondents in both Boulder and Northern Colorado indicated expected revenue growth and expected employment growth, and a greater percentage of Boulder respondents indicated expected profit growth.
2016 Strategies for Success
After 2015 performance and 2016 outlook information is presented, our survey report also provides valuable C-level input on strategies for success. These strategies cover a range of topics, including sales, profitability, technology, and talent. Of course no one strategy is right for all businesses — even those businesses in a focused geographic region.
At any given time different organizations are in different phases of growth. According to Les McKeown, author of Predictable Success: Getting Your Organization on the Growth Track—and Keeping It There, these phases follow seven stages of growth (and occasional decline) that any business might experience. Organizations could be in an early struggle or robust growth phase, which might be the scenario for many Colorado craft breweries. They could be in the tumultuous white water phase, implementing systems and processes to scale up, which could be the situation for growing technology companies. Or they could be in a rut, with key personnel leaving because vision and excitement has vanished, which might be the case with a construction company.
Following are a variety of anticipated strategies for diverse industries in 2016. It is important to keep in mind no two businesses are the same — even those in the same geographic area and even in the same industry. What might work for one business might not work for another.
For 2016, the construction industry has an overall high-growth rating, which varies among customer industries. The top key drivers are availability and cost of labor. Additionally, the price of construction materials and government spending were identified as big challenges by a majority of respondents. Still, more than 60% of respondents said they’ll invest in equipment, and more than 30% will invest in geographic expansion and vertical acquisition.
Financial Services Outlook
Tax and regulatory compliance remain a critical challenge, particularly as political changes occur. To bring clarity to this uncertainty, financial companies will shift their focus on “big data”: innovation in data systems and analytics. Based on these metrics, they’ll determine the most strategic action to employ. More than 60% of respondents said analytics and tech innovation are be top priorities.
Unknown future reimbursement rates, major new regulations, an aging population, and technology have all changed the way healthcare businesses operate. Strategies focused on consolidation and affiliation will continue this year as providers look to reduce costs, respond to competitive pressure, and improve supplier negotiation leverage. Another key strategy will be implementation of electronic health records and other technology advancements such as telemedicine.
Many manufacturers faced softer demand in 2015 than anticipated. This is particularly true for those with a significant percentage of international customers who are dealing with the strong dollar and less stable global markets. Looking ahead, challenges might include the availability of labor, raw material costs, and changes in consumer spending as a result of the perceived health of the wider economy.
Demand for technology products and services is expected to increase across virtually all industry sectors. In particular, users are increasingly interested in cloud- and subscription-based software with the mobile revolution creating opportunities for hardware and app developers. More than 70% of technology businesses plan to make significant investments for in-house research and development, and more than 60% plan to employ strategic alliances through partnerships, mergers, and collaboration.
Questions are everywhere. Answers are not. For you to achieve success in 2016, you need to see the whole picture. You need key insights from true trusted advisors and fellow business executives who replace an educated guess with a well-informed decision. Collectively we believe the information we share, via our Business Outlook Survey, a wide range of client and community events, and one-on-one meetings, provides practical, experienced insights and new thinking to help Boulder and northern Colorado businesses grow and prosper.
More than 250 CEOs, CFOs, Owners, Presidents, etc. participate in the annual EKS&H Business Outlook Survey and include business leaders in many industries significant in the Boulder and Northern Colorado business communities.
This article was originally published by BizWest magazine on 4/15/16.
To learn how we can assist your business with the opportunities and challenges of the local business environment in Colorado, please contact Chris Otto in Fort Collins at firstname.lastname@example.org or 970-282-5400 or Jim Cowgill in Boulder at email@example.com or 303-448-7000.