Dane County business leaders say 2018 has given them plenty to cheer about — including more employees — and they expect much the same in 2019.
Three-fourths of the local executives who replied to the annual First Business Bank Economic Survey said sales jumped in 2018 and even more, 78 percent, expect revenue to increase in 2019.
More than half, 53 percent, said their company was more profitable this year than last and 55 percent project another round of profitability gains in 2019.
Overall, 39 percent said their business performed better than they expected in 2018, and nearly twice that many — 74 percent — are anticipating a better outcome next year, according to the survey, released Wednesday.
“The results were overwhelmingly positive in just about every category,” First Business Bank President Jim Hartlieb said.
“I’m impressed by the number of business leaders who said their 2018 performance exceeded their own expectations for this year,” First Business Bank CEO Mark Meloy said. “Last year, business leaders’ predictions for 2018 were very optimistic, so exceeding those is remarkable.”
Hiring and wages also rose. The survey showed 62 percent of the Madison-area employers added staff in 2018 and 58 percent expect to increase employment levels next year.
More than four of every five executives — 82 percent — said they raised employee pay this year, and 77 percent anticipate handing out raises next year.
Few expect a downward move. Only 6 percent said they think they will cut staff next year and 2 percent said they will likely reduce pay.
Hartlieb said he was a little surprised by the high rate of optimism for 2019.
“I’m seeing and hearing a lot of good things, but there’s a certain sentiment about when is the next shoe going to drop,” he said. “Those sentiments didn’t come through in the survey at all.”
Hartlieb said the positive attitudes by business execs were illustrated by a high level of business loans this year.
In the Madison area, “this was our largest growth in loans that we’ve had in our history, on a dollar basis,” he said.
From Sept. 30, 2017, to Sept. 30, 2018, the total volume of loans and leases for First Business Bank rose from $1.45 billion to $1.58 billion, an increase of about $136 million, or 9.4 percent, according to data compiled by the Federal Deposit Insurance Corp. The figures represent the total throughout First Business’ territory, which also includes Milwaukee, Appleton, Kansas City and specialty finance offerings.
But whether the loans were for adding equipment, space or staff, or for mergers and acquisitions, business leaders examined the deals carefully, Hartlieb said.
“Since the Great Recession … I would say there’s definitely more due diligence that business owners take on when looking at capital expenditures or investments in their business,” he said.
Among the 23 percent of respondents who said their businesses did not do as well as expected this year, the biggest reason they cited was a shortage of workers with the skills needed for the positions. Other common problems named were domestic competition and higher operating costs.
The poll was conducted by Moses Altsech, a lecturer in marketing at the UW-Madison School of Business and president of Moses Altsech Consulting.
The survey was distributed electronically and 134 people replied between mid-September and early November — primarily before the midterm elections and stock market declines.
Hartlieb said he doesn’t think those factors would have changed the projections.
“Our clients are pretty resilient and feel like they can work through issues like that, be it a change in government leadership or stock market variability,” Hartlieb said.
This is the 16th year that First Business Bank has conducted the annual survey of the local economy.