By: Robert Melchionni, Central & Eastern Pennsylvania Market Executive for Middle Market Banking & Specialized Industries at JPMorgan Chase Commercial Banking
While businesses in Central Pennsylvania are learning to navigate ongoing labor and supply chain shortages, many still have a positive outlook for their company’s performance. This echoes the findings in JPMorgan Chase’s 2022 Business Leaders Outlook survey, which revealed that the large majority (83%) of midsize business leaders nationally are optimistic about their own company’s performance in the year ahead. Exciting growth prospects are likely a key driver of this optimism, with 9 in 10 business leaders saying they expect their business to grow this year.
Central Pennsylvania business owners have laid the groundwork for growth by diversifying their business models, creating competitive employee retention strategies and developing plans to pass down family-owned businesses. These three areas will be a focus for the region’s businesses in the year ahead.
Diversifying Like Never Before
For the past two years, many businesses have been focused on sustaining and surviving, though some businesses in sectors like home improvement and e-commerce have boomed. Now, Central Pennsylvania-based companies are strategizing how to best move forward and flourish in today’s business environment.
Many business leaders are looking for ways to expand their offerings – and even their footprints. This is being realized through diversification of services and operations, including expanding to new locations in the region or beyond, investing in new business lines to address clients’ needs and differentiating themselves from competitors. Some businesses are also looking at strategic capital expenditures, which allow for long-term investments in areas such as property, technology and equipment.
Regional businesses have also explored acquisitions to grow their footprints, capacities and reach. These can provide benefits like reducing material and manufacturing costs, opening new lines in manufacturing facilities and accessing technologies more quickly and cheaply than before. It’s important for businesses pursuing acquisitions to work closely with their trusted financial partners to ensure they plan strategically, assess their debt capacities and can scale their growth to maximize their deal-related benefits.
Upskilling the Workforce
To sustainably grow, businesses need to not only attract but also retain talent. The labor shortage is currently the biggest challenge that companies are facing, with 68% of respondents in the Business Leaders Outlook survey citing it as a challenge.
Labor shortages here in Central Pennsylvania create a plethora of opportunities for skilled workers in industries like manufacturing, transportation and logistics. For companies facing these shortages, it requires creative solutions like investing in training programs to upskill their current workforce.
To garner talent, local businesses are finding ways to separate themselves from their competitors. For some, that means increasing wages, while others have created incentive programs providing retention bonuses after employees stay with the company for a certain amount of time. Additionally, business leaders are re-thinking their incentives and benefits to make employees feel valued and appreciated.
Passing the Torch
Many businesses in Central Pennsylvania are family-owned and starting to face generational shifts in ownership and leadership, which can create new growth opportunities, fresh approaches to challenges and new demands for partners. Harvard Business Review found that family businesses, ranging from small businesses to Fortune 500 firms, make up half of both the United States’ employment and gross national product. These companies have proven that multi-generational leadership transfers and ownership longevity are possible.
With even the youngest of millennials rising into leadership positions at small and family-owned businesses, transitions are happening daily. In fact, the Business Leaders Outlook survey found that more than half (62%) of businesses considering an ownership transfer are looking to complete the transition within the next two years.
Incoming business owners are innovative, tech-savvy, team-oriented and open to new ideas or process improvements in ways some former leaders may not have been. They also realize that working with the right partners can help them create efficiencies, find new treasury and other solutions and bolster their cybersecurity to safeguard their organizations. New business owners’ willingness to adapt and consider new ideas will serve them well as they carry their organizations into the future.
We’re in This Together
Strong businesses in Central Pennsylvania will continue to drive the economy forward as the area recovers from the pandemic. As these businesses grow and their needs expand, they’ll need to work with financial partners possessing the capabilities and expertise of serving small and midsize businesses and the sectors in which they operate. Additionally, businesses may want to work with financial partners who have a foothold in their communities and are proud to help their businesses realize – and live up to – their potential.
For more resources and guidance to help plan for business growth, please visit www.jpmorgan.com/future.