Business executives in the Kansas City metro expressed optimism about what lies ahead in 2022 — despite lingering pandemic-related challenges, according to newly released local and regional survey results from First Business Bank.
“There are always multiple dimensions of the story to consider, but 2021 was a big improvement over 2020, and with employment increasing across almost every industry, the overall outlook for Kansas City Metro is positive,” said Rob Barker, president of First Business Bank’s Kansas City metro market. “Spillover effects from high demand for goods and services are a major part of why businesses are facing so many challenges at once, and these challenges are expected to persist. Companies will need to stay vigilant and be responsive to change to help mitigate risk.”
The Business Statistics & Trends Survey — conducted annually since 2018 — received responses from 305 business leaders in the Kansas City metro, Southeast Wisconsin, Northeast Wisconsin, and Greater Dane County. It was completed in the context of an economy that is still trying to find its footing after the COVID-19 resurgence complicated business recovery efforts.
Across all markets, 46 percent of survey respondents reported better-than-projected results in 2021, and 20 percent said their businesses performed worse than projected.
In the Kansas City metro specifically, business leaders grappled most with a talent shortage, with a supply shortage and remote workforce tied for second place, according to the results.
In terms of overall business performance, the percentage of responding companies whose performance exceeded expectations jumped 11 percentage points over the previous year to 58 percent and 13 percent reported performing below expectations in 2021.
Sub-par performance was attributed equally to talent and supply shortages, higher operating costs, and the pandemic. Exceptional performance was attributed largely to investments in new talent followed by increased prices. By far the top strategy implemented in 2021 was client base diversification, with cross-training employees and creating a process for generating innovative business ideas also making the top three.
Click here to read the Business Statistics & Trends Report.
Sales and profitability
Sales in 2021 was a reversal from last year, as 66 percent of Kansas City metro companies reported increases and just 16 percent reported decreases. These figures represent 28-percentage point improvements in both metrics. Further, 19 percent reported no change in sales revenues over the past year.
Similarly, the percentage of companies that reported profit gains rose from 44 percent to 72 percent, whereas those reporting losses fell from 31 percent to 19 percent.
Hiring and wages
As was the case in other areas, talent shortages overshadowed all other challenges facing Kansas City businesses in 2021. Despite that reality, nearly half as many companies reported workforce decreases this year (13 percent) compared to last year, with 44 percent saying that their workforce remained unchanged. Three-quarters of respondents reported that wages rose at their companies, with only 3 percent showing a decrease in wages.
Expectations for 2022
Diversifying the client base will remain the top priority for Kansas City Metro businesses in 2022, with increasing the workforce and creating a process for generating innovative business ideas also ranking highly among strategies to be implemented in the coming year. Finding new talent and higher inflation are expected to be the top challenges in 2022, followed by the continued impact of the pandemic.
Furthermore, business leaders are more cautious about their predictions, with fewer projecting to do better next year (69 percent) than those who said the same last year (84 percent). However, a full 28 percent expect the same performance in 2022 as 2021. Three percent of respondents expect to perform worse in 2022 than 2021, which is up one percentage point from a year ago.
Other notable statistics include:
- Only 6 percent project lower sales in 2022;
- 66 percent expect increased profits;
- 56 percent predict that they will grow their workforces; and
- No companies expect wage decreases, and more than three-quarters (78 percent) expect increases.