Monday, May 23, 2022

How Small Business CEOs Adapt to Labor Shortage

In our most recent CEO Survey, 90% of respondents reported that they are experiencing a labor shortage impacting their business.

So, we asked members to share how they have adapted their business models with the VACEOs community through our private social network, VACEOs Connect. Here are some of their stories.

CEO of a Regional Engineering Firm

I’m happy to say that the labor shortage is forcing our firm to accelerate what I felt was going to be an inevitable, but slow shift in our clients and markets. I’ve been saying for years that once we are committed to working with only those clients who value our services, we will see the list of markets and client types shrink, resulting in higher revenues with more profitable clients. With the inability to serve everyone who seeks our services, it has been easier to say yes to our long-term clients who value us and to say no to the newcomers who are shopping for a low-priced commodity or a one-off project. 

In summary, while the labor shortage has been painful and costly, I feel we will come out of this better than we went into it.

Owner of a Tech Services Firm

We are a tech services company that has enjoyed a healthy culture of being in the office together 5 days a week.  However, because of the shift in the tech industry I compete with employees and salaries from all over the United States, forcing me to a hybrid model – 95% remote, a few of us left in the office a couple of days a week.  With the significant increase in salary demands from tech workers, I have been forced to hire nearshore (Latin America) developers instead of US-based developers.  The nearshore developers are good, but the language barrier or heavy accents and differences in culture have proven to have a negative impact on our client experience.  Our future plans for hiring include fewer US-based employees and more nearshore.  We are planning on hiring more experienced, client-facing, US developers for a premium and supplement with nearshore.  For example, where I would have usually hired two or three US developers, I will likely hire one US developer and one to two nearshore developers.

President of a Custom Kitchen & Bath Design Company

Our goal used to be to install every project we sold, for quality control and to offer a turn-key experience. Now, due to skilled labor shortage, we have increased the price for us to install. This has two purposes: 1) to pay my installers more and thus increase loyalty, and 2) to make the cost of professional installation a true investment in the product/project rather than something the client takes for granted. No one has pushed back.

We also have a severe shortage of truck drivers. We have been hiring out deliveries more often and paying 300% more than in-house deliveries. Again, no one is pushing back and asking to pick up their products at our warehouse.

And thirdly, we have tightened our trading area. We love doing projects all over the state (and country), but with no trusted trades in outlying locations, we have decided not to take on those projects.

Not All Businesses Impacted Negatively

Ten percent of the businesses in our survey have not experienced
negative impacts of the labor shortage. Here’s one example.

Founder of Marketing Agency

Fortunately, our business model was designed to use a fully remote, independent workforce. That put us in a great position for The Great Resignation because many brilliant marketers decided to work independently. That’s given us access to more good people.

Takeways

Small and mid-sized businesses tend to be more nimble than large corporations. We’ve seen the leaders of these organizations make hard and soft pivots to remain competitive. Think in terms of quarters instead of years.

Actions you can take

  • Eliminate or add lines of business, territories, products, services.
  • Analyze low-profit customers and replace with more profitable ones.
  • Invest in automation, software, or equipment that reduces labor demands.
  • Increase prices to reflect the cost of doing business.
  • Outsource or partner instead of hiring


Scot McRoberts wrote this post. He is founding executive director of the Virginia Council of CEOs.

Posted by Scot McRoberts at 9:10 am
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Friday, May 13, 2022

Virginia CEOs Expect Increased Sales Despite Shortages

In Q1 survey, 70% expect sales to increase in next six months

According to the first quarter CEO Economic Outlook survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs (VACEOs), about 70% of CEOs expect sales to increase in the next six months, despite supply chain and labor shortages.

Ninety percent of CEOs reported a labor shortage impacting their business, and 75% reported at least a minor impact from supply chain shortages.

Andrea C. Johnson, CEO of van der Linde Recycling
& Container Rentals LLC

VACEOs member, Andrea C. Johnson, CEO of van der Linde Recycling & Container Rentals LLC in Fluvanna County, recently told Virginia Business that her company has faced several supply chain challenges. “The time needed to obtain parts for maintenance and repair of trucks and equipment has increased. Additionally, the company faces higher costs on basic safety equipment for employees.”

Johnson added, “probably the biggest impact we’ve had right now, because I run a fleet and equipment, is fuel,” she said. “Our fuel costs have more than doubled over this time last year … and we’re having to add that to the customer cost.”

Another VACEOs member, Henry Clifford, CEO of Richmond-based Livewire LLC, said that he and his staff now call securing supplies “the battle of next week.”

Livewire offers technology integration to homes and businesses, so it directly confronted chip shortages. “At this point it’s now a daily and weekly activity where our logistics folks have just gotten used to life during wartime, essentially, and almost normalized the supply chain shortages,” he said, adding that some lead times for obtaining gear run a year out.

Scot McRoberts,
VACEOs Executive Director

Yet, despite facing strong headwinds like a looming recession and the war in Ukraine, entrepreneurs remain optimistic, said VACEOs Executive Director Scot McRoberts. A higher percentage of respondents (70%) expected sales growth in the next six months than in the survey conducted at the end of the fourth quarter of 2021 (60%).

“These are small and midsize companies’ CEOs,” he said. “These aren’t corporate CEOs, and I think they’re more nimble than larger companies, so they’ve adjusted well to the challenges of the pandemic.”

“One [reason for that] is adjusting to the new virtual work environment that’s demanded by employees,” McRoberts said. “Even though they may be adding employees and growing the business, their demand for seats in the office is not growing with it.

Looking Forward Optimistically

Taken as a whole, the results pertaining to sales, capital spending, and employment continue to be positive with the overall Economic Outlook Index increasing slightly (98.1 versus 93.7) relative to the results from the end of Q4 2021.  (Click HERE to view the full survey.)

“The survey results suggest that CEOs continue to be optimistic about the next six months, particularly with respect to predicted sales and employment. This is in spite of significant labor shortages being experienced and ongoing supply chain issues. The overall index has returned to its pre-COVID level.”

Rich Boulger, associate dean at the Robins School

Rich Boulger, associate dean of the University of Richmond Robins School of Business, administered the survey from April 5 to April 14. The majority of respondents were in the services and construction industries. The average company represented had about $11 million in revenue for the past 12-month period and 53 employees.

The Robins School adapted the survey from one from the Business Roundtable, a Washington, D.C.-based lobbyist association of CEOs of U.S. companies, and has administered it since 2010.

About Robins School of Business

The Robins School of Business is the only fully-accredited, highly-ranked undergraduate business school that also is part of a highly-ranked liberal arts university. U.S. News ranks the Robins School’s MBA program #2 in Virginia. The school’s executive education division offers customized training and consulting to a wide variety of businesses.

About Virginia Council of CEOs (VACEOs)

Virginia Council of CEOs (VACEOs) is a nonprofit organization connecting CEOs for learning and growth. Formed more than 20 years ago, member benefits include placement in a peer roundtable group and access to a thought leader network, and a robust program of events for learning and growth. This is not a networking group, but rather a group of CEO peers who are invested in the success of each member. To qualify for membership CEOs must run a business with $1M+ revenue and 5+FTEs. Learn more at www.vaceos.org.

Posted by Scot McRoberts at 3:56 pm
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Monday, January 31, 2022

Virginia Economic Outlook Index Remains Near Pre-COVID Level in Q4 2021; Most Employers Feel Impact of Omicron Surge

CEOs Expect Sales and Employment to Increase Over Next 6 Months with Capital Spending Nearly Flat

Each quarter the Virginia Council of CEOs (VACEOs) and University of Richmond’s Robins School of Business partner to take the pulse of top executives in the region through a comprehensive Virginia CEO Economic Outlook Survey. 

The fourth quarter 2021 CEO Economic Outlook survey finds that the Index remains near pre-COVID level and that most employers are feeling the impact of the Omicron surge. Additionally, CEOs expect sales and employment to increase over next 6 months with capital spending nearly flat. 

Robins School of Business/VA Council of CEOs Economic Survey Historical Data

YEARQ1Q2Q3Q4
2021102.8094.6102.2093.7
2020 -18.73*50.4365.2069.20
2019100.594.1386.33101.47
201894.6092.73104.3097.97
2017108.97* 103.6399.17106.30
2016102.0089.0089.67107.37
201593.9093.4299.8092.67
201486.0788.7196.1095.92
201386.4091.6092.5389.57
201294.1081.1381.1777.57
201185.6374.1781.1788.63
201081.3394.4792.27
*historic high/low

“The survey results suggest that CEOs continue to be optimistic about the next six months, particularly with respect to predicted sales and employment. The overall index has returned to the levels just slightly below that experienced for several quarters pre-COVID,” said Rich Boulger, associate dean at the Robins School, who administers the survey and collects the responses. “Specifically, the index is currently 93.7 versus the average of 99.2 in the 13 quarters prior to Q1 2020.”

“I’ve heard from many CEOs that the Omicron surge is making it difficult to keep staffing levels up to normal. That seems to be the primary reason for the 8-point drop in the index” said Scot McRoberts, executive director of VACEOs. “COVID aside, these small business CEOs are seeing growth and opportunity in the next six months.”

SUMMARY: OMICRON, SALES, CAPITAL SPENDING & HIRING

Most CEOS have experienced at least a minor impact from the Omicron variant on their business. That’s the latest from the quarterly CEO Economic Outlook Survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs.

Eight-four percent of CEOS reported a minor impact from Omicron. Nearly 60% of CEOs expect sales to increase and just over 60% expect employment to increase over the next six months.

The survey found expectations over the next six months for sales and employment are positive although those expecting growth in sales were down slightly compared with the end of Q3 2021.Expectations with regard to capital spending were primarily flat.

SALES EXPECTATIONS

More than half (59%) of CEOs indicated that they expect sales to increase over the next six months. 

  • 10% expected sales to be “significantly higher.”
  • 49% expected sales to be “higher.” 
  • 8% expected sales to be “lower.”
  • None expected sales to be “significantly lower.” 
  • 33% indicated they expected no change

CAPITAL SPENDING EXPECTATIONS

Forty-one percent of CEOs expect capital spending to increase over the next six months (compared with 47% last quarter), while nearly 15% expect capital spending to decrease. More than 44% expect capital spending to remain flat.   

EMPLOYMENT EXPECTATIONS

Sixty-two percent of respondent CEOs expect employment to increase over the next six months. Additionally, 30% expect employment to remain flat while only 8% expect employment to fall. 

Taken as a whole, the results pertaining to sales, capital spending, and employment continue to be positive although the overall Economic Outlook Index decreased (93.7 versus 102.2) relative to the results from the end of Q3 2021.  

WILL EMPLOYEES BE REQUIRED TO RETURN TO WORK? 

The survey also asked CEOs how the current COVID-19 surge related to the Omicron variant impacted their business. Their response was as follows:

  • No impact: 16%
  • Minor impact: 63%
  • Significant impact: 21%

Employers indicated that the impact was largely due to employee absenteeism and related costs.

Additionally, CEOs were asked what percentage of your workforce will be working remotely relative to pre-COVID.  Their response was as follows:

  • A higher percentage will be working remotely: 46%
  • No change in the percentage working remotely: 43%
  • A lower percentage will be working remotely: 11%

SURVEY SAMPLE

  • 61 CEOs responded to the survey, which was administered January 10–14, 2022 
  • Multiple industries are represented in the sample, although services, retail and construction represented the majority of the respondents
  • The average company revenue (most recent 12-month period): $8 million
  • The average employment count: 55

Additional Details about the CEO Economic Survey for Q4 2021
Released in January 2022

The following survey results show projections for the next six months for sales, capital spending, and employment.

Robins School of Business/VA Council of CEOs Q4 2021 Economic Survey Results

About the Economic Survey

The Robins School and VACEOs jointly conduct the quarterly survey, which regularly asks about expectations for sales, capital spending and employment, plus other relevant issues, helping Virginia companies anticipate business conditions and plan for growth. 

The Robins School adapted the survey from the Business Roundtable, an association of CEOs of American companies that conducts a similar survey nationally. Rich Boulger, associate dean at the Robins School, administers the survey and collects the responses each quarter. The survey has been administered quarterly since 2010.

About Virginia Council of CEOs (VACEOs)

Virginia Council of CEOs (VACEOs) is a nonprofit organization connecting CEOs for learning and growth. Formed more than 20 years ago, member benefits include placement in a peer roundtable group and access to a thought leader network, and a robust program of events for learning and growth. This is not a networking group, but rather a group of CEO peers who are invested in the success of each member. To qualify for membership CEOs must run a business with $1M+ revenue and 5+FTEs. Learn more at www.vaceos.org.

About Robins School of Business

The Robins School of Business is the only fully-accredited, highly-ranked undergraduate business school that also is part of a highly-ranked liberal arts university. U.S. News ranks the Robins School’s MBA program #2 in Virginia. The school’s executive education division offers customized training and consulting to a wide variety of businesses.


Posted by Scot McRoberts at 4:24 pm
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Tuesday, October 26, 2021

Virginia Economic Outlook Index Back to Pre-COVID Level in Q3 2021; Employers Hesitant to Require Return to In-Person Work

CEOs expect sales, capital spending, and employment to increase over next 6 months

Each quarter the Virginia Council of CEOs (VACEOs) and University of Richmond’s Robins School of Business partner to take the pulse of top executives in the region through a comprehensive Virginia CEO Economic Outlook Survey. 

The third quarter 2021 CEO Economic Outlook survey finds that the Index is back to pre-COVID level and that employers are hesitant to require return to in-person work. Additionally, CEOs expect sales, capital spending, and employment to increase over next 6 months. 

Robins School of Business/VA Council of CEOs Economic Survey Historical Data

YEARQ1Q2Q3Q4
2021102.8094.6102.20
2020 -18.73*50.4365.2069.20
2019100.594.1386.33101.47
201894.6092.73104.3097.97
2017108.97* 103.6399.17106.30
2016102.0089.0089.67107.37
201593.9093.4299.8092.67
201486.0788.7196.1095.92
201386.4091.6092.5389.57
201294.1081.1381.1777.57
201185.6374.1781.1788.63
201081.3394.4792.27
*historic high/low

“These CEOs are expressing a pre-pandemic level of optimism. That is in spite of the significant headwinds of workforce challenges and supply chain disruptions” said Scot McRoberts, Executive Director of VACEOs. “That’s good news for all of us.”

“The survey results suggest that CEOs are optimistic about the next six months, particularly with respect to predicted sales and employment,” said Rich Boulger, Associate Dean at the Robins School. Boulger administers the survey and collects the responses each quarter. He adds, “The overall index has returned to the levels experienced for several quarters pre-COVID. Specifically, the index has increased from 94.6 to 102.2 this quarter.”

SUMMARY: SALES, CAPITAL SPENDING, HIRING

Nearly 70% of CEOs expect sales to increase over the next six months and many will not require a return to in-person work just yet. These were two data points of the latest quarterly CEO Economic Outlook Survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs.

The survey also found expectations over the next six months for sales, capital spending, and employment are positive compared with expectations at the end of Q2 2021

SALES EXPECTATIONS

More than half (68%) of CEOs indicated that they expect sales to increase over the next six months. 

  • 13% expected sales to be “significantly higher.”
  • 55% expected sales to be “higher.” 
  • 8% expected sales to be “lower.”
  • 2% expected sales to be “significantly lower.” 
  • 23% indicated they expected no change.

CAPITAL SPENDING EXPECTATIONS

  • 47% of CEOs expect capital spending to increase over the next six months (compared with 36% last quarter)
  • 8% expect capital spending to decrease.
  • 45% expect capital spending to remain flat.  

EMPLOYMENT EXPECTATIONS

  • 60% of respondent CEOs expect employment to increase over the next six months.
  • 38% expect employment to remain flat 
  • 2% expect employment to fall.  

Taken as a whole, the results pertaining to sales, capital spending and employment are positive producing a slight increase in the economic outlook (102.2 versus 94.6) relative to the results from the end of Q2 2021.  

WILL EMPLOYEES BE REQUIRED TO RETURN TO WORK? 

The survey asked CEOs to also express their plans, if any, to require employees to return to work in-person if they had worked in-person prior to the pandemic. Their response regarding returning to in-person work was as follows:

  • Yes (will require those in-person pre-COVID to return to in-person): 24%
  • No (will NOT require those in-person pre-COVID to return to in-person): 45%
  • Unclear at this time: 31%

Additionally, CEOs were asked what percentage of your workforce will be working remotely relative to pre-COVID.  Their response was as follows:

  • A higher percentage will be working remotely: 32%
  • No change in the percentage working remotely: 47%
  • A lower percentage will be working remotely: 21%

SURVEY SAMPLE

  • 53 CEOs responded to the survey, which was administered October 5–11, 2021 
  • Multiple industries are represented in the sample, although services, retail and construction represented the majority of the respondents
  • The average company revenue (most recent 12-month period): $16 million
  • The average employment count: 80

The following survey results show projections for the next six months for sales, capital spending, and employment.

Robins School of Business/VA Council of CEOs Q3 2021 Economic Survey Results

About the Economic Survey

The Robins School and VACEOs jointly conduct the quarterly survey, which regularly asks about expectations for sales, capital spending and employment, plus other relevant issues, helping Virginia companies anticipate business conditions and plan for growth. 

The Robins School adapted the survey from the Business Roundtable, an association of CEOs of American companies that conducts a similar survey nationally. Rich Boulger, associate dean at the Robins School, administers the survey and collects the responses each quarter. The survey has been administered quarterly since 2010.

About Robins School of Business

The Robins School of Business is the only fully-accredited, highly-ranked undergraduate business school that also is part of a highly-ranked liberal arts university. U.S. News ranks the Robins School’s MBA program #2 in Virginia. The school’s executive education division offers customized training and consulting to a wide variety of businesses.

Posted by Staff at 3:14 pm
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Monday, August 16, 2021

Virginia Economic Outlook Index Down Slightly in Q2 2021, Employers Hesitant to Require Vaccine

CEOs expect sales and employment to increase over the next six months with capital spending flat. 

Each quarter the Virginia Council of CEOs (VACEOs) and University of Richmond’s Robins School of Business partner to take the pulse of top executives in the region through a comprehensive Virginia CEO Economic Outlook Survey. 

The second quarter 2021 CEO Economic Outlook survey finds that expectations over the next six months for sales and employment are positive with capital spending remaining flat compared with expectations at the end of Q1 2021.  

Taken as a whole, the results pertaining to sales, capital spending, and employment are still positive but produce a slight reduction in the economic outlook (94.6 versus 103.0) relative to the results from the end of Q1 2021.  

Robins School of Business/VA Council of CEOs Economic Survey Historical Data

YEARQ1Q2Q3Q4
2021102.8094.6
2020 -18.73*50.4365.2069.20
2019100.594.1386.33101.47
201894.6092.73104.3097.97
2017108.97* 103.6399.17106.30
2016102.0089.0089.67107.37
201593.9093.4299.8092.67
201486.0788.7196.1095.92
201386.4091.6092.5389.57
201294.1081.1381.1777.57
201185.6374.1781.1788.63
201081.3394.4792.27
*historic high/low

Says Scot McRoberts, executive director of the Virginia Council of CEOs, “The remarkable thing to me in this survey is that 60% of the CEOs reported that their businesses were stronger than pre-pandemic. This syncs with the observation that the pandemic hit hardest in narrow verticals. The slight dip in the index may be related to recent news of a Covid surge, along with ongoing workforce shortages. I see continuing optimism among the small and mid-sized business CEOs with whom I work.”

“The survey results suggest that CEOs remain optimistic about the next six months, although they do not expect as much growth as they did a quarter ago. This is likely due to the fact that they have experienced significant growth over the last quarter and are basing growth projections on a higher base,” said Rich Boulger, associate dean at the Robins School.

CEOs WEIGH IN ON REQUIRING VACCINATIONS AND IMPACT ON PANDEMIC ON OVERALL BUSINESS IMPACT

In addition to the survey questions regarding sales, capital spending, and employment, the survey asked CEOs to express their plans, if any, with regard to requiring employees to be vaccinated for COVID-19 in order to work in person. Their response regarding required vaccinations was as follows:

  • Yes (will require vaccination): 10%
  • No (will NOT require vaccination): 63%
  • Unclear at this time whether vaccination will be required: 27%

Additionally, CEOs were asked what the overall impact was on their business over the timeframe of the pandemic. Their response was as follows:

  • The business is stronger than pre-pandemic: 60%
  • The business is weaker than pre-pandemic: 16%
  • The business is unchanged relative to pre-pandemic: 24%

EXECUTIVE SUMMARY: SALES, CAPITAL SPENDING, HIRING

To summarize, CEOs predictions over the next six months include:

SALES EXPECTATIONS

  • 68 percent expect an increase in sales 
  • 7 percent expected sales to be “lower”

CAPITAL SPENDING EXPECTATIONS

  • 36 percent of respondents expect capital spending to increase (compared to 44 percent last quarter)
  • 12 percent expect capital spending to decrease
  • 52 percent expect capital spending to remain flat

EMPLOYMENT EXPECTATIONS

  • 59 precent expect employment to increase
  • 7 percent expect employment to fall
  • 34 percent expect employment to remain flat

SURVEY SAMPLE

  • 59 CEOs responded to the survey, which was administered July 12 – July 16, 2021 
  • Multiple industries are represented in the sample although services and construction represented the majority of the respondents. 
  • The average company revenue (most recent 12-month period): $18 million
  • The average employment count: 80

The following survey results from the first quarter of 2021 and the second quarter of 2021 show projections for the next six months for sales, capital spending, and employment.

  • The average company revenue (most recent 12-month period): $18 million
  • The average employment count: 80

The following survey results from the first quarter of 2021 and the second quarter of 2021 show projections for the next six months for sales, capital spending, and employment.

Robins School of Business/VA Council of CEOs Q2 2021 Economic Survey Results

About the Economic Survey

The Robins School and VACEOs jointly conduct the quarterly survey, which regularly asks about expectations for sales, capital spending and employment, plus other relevant issues, helping Virginia companies anticipate business conditions and plan for growth. 

The Robins School adapted the survey from the Business Roundtable, an association of CEOs of American companies that conducts a similar survey nationally. Rich Boulger, associate dean at the Robins School, administers the survey and collects the responses each quarter. The survey has been administered quarterly since 2010.

About Robins School of Business

The Robins School of Business is the only fully-accredited, highly-ranked undergraduate business school that also is part of a highly-ranked liberal arts university. U.S. News ranks the Robins School’s MBA program #2 in Virginia. The school’s executive education division offers customized training and consulting to a wide variety of businesses.

Posted by Staff at 4:25 pm
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