What CFOs Are Optimistic About


Meet Anne. She's a CFO. She's happy.

No, it isn’t because she got a great interest rate on a car, or she just published her first digital book. Instead, Anne has a giddiness about the financial state of corporate America.

And she’s not the only one.

CFOs everywhere are, to put it conservatively, optimistic about companies—especially those at large organizations. Recent surveys point to a collective excitement about performance and cash influxes leading to growth, revenue, new hires, and more. In short: Get ready to accelerate!

Ok, so let’s look at optimism.

Deloitte’s CFO Signals Survey asked 155 CFOs from companies with mostly $1B in revenue how they felt about their companies’ financial prospects. +54 said they were optimistic, up from +47 last quarter.

While it may read as a small jump, it’s actually a new survey high—as in “They’ve never been this optimistic during the entire lifespan of this survey.”

Additionally, more than half of the CFOs expressed rising optimism in general, 90% say current conditions are good, and almost 60% indicate conditions will be better in a year.

Remember that CFOs (in general) are not ones to overstate. They’re often risk-adverse and detail-oriented, which makes sense because they guard companies’ financial performances. While the sky-high optimism won’t induce spontaneous CFO flamenco dancing in the hallways, it might elicit some light toe-tapping.

What’s causing this?

The report points to three occurrences for this optimism:

  1. Belief in the positive momentum of the North American, Chinese, and European economies
  2. Recent tax reform, which cuts the corporate tax rate
  3. Government spending bills that increase spending for the next two years

Taken together, they present a case for strong economies and growth opportunities for businesses.

How do CFOs plan to spend money this year?

CFOs said they will increase investments in their companies, with 38% expecting to invest more in innovation and R&D such as new technology, products, and/or services. Nine out of 10 CFOs anticipate investments in core businesses, while 82% anticipate investment in new businesses.

They also anticipate additional hiring and raising salaries. According to the Duke University/CFO Global Business Outlook for Q1 2018, “… more than 40 percent of U.S. companies say they plan to boost wages and 38 percent will increase hiring in 2018 ...”  This is complemented by Deloitte’s survey, which reported 31% will hire more and 28% will increase wages.

How does this help SMBs?

First, status quo or cutting costs are both out the door. Companies aggressively investing in core and new businesses need suppliers, partners, and consultants to support their visions. For B2B companies, this translates to ample opportunities. High-dollar sales deals that might have petered out will start to pick up and be accompanied by new leads. As new businesses develop, they will need consultants and partners (like the ones your company specializes in) to launch as well as all the third-parties potentially involved downstream such as marketing and advertising agencies.

Investments in R&D and innovation will spur interest in items like technology that rely on AI and automation to support critical processes and unite data sources. Take, for example, blockchain.

Grant Thornton survey found that only three percent of CFOs feel they understand blockchain. That means for SMBs focused on blockchain, there’s an immense opportunity to educate and sell their capabilities.

Second, assertive expansion of businesses and services mean there is a greater need for the people that power them. That’s right—new hires. Companies will be adding to their ranks and willing to pay handsomely for talented employees in a tight market. Potentially, more people will be employed and at better salaries. For B2C businesses, this may lead to more spending on the consumer side as employees enjoy their higher incomes. For B2B organizations, the need for new employees coupled with a limited amount available means staffing companies will be in demand. Businesses will also look for innovative ways to ensure they have the resources they need, which means hikes in outsourcing and partnerships.

As the signs on the highway say: Buckle up. CFOs at large companies anticipate moving forward at full throttle. And you’re invited to join the ride.