Beyond the overall economy, CEOs report that external issues such as inflation and cost of capital will have more of an impact on growth than in years past. In 2006, 22 percent of chiefs felt that way; today 40 percent do. Kirby CEO Joseph Pyne believes that “more headwinds for business in the future will be in the form of government regulation, negative public perception and higher taxes. I think that’s going to take a toll, especially on weaker companies.” Daniel O’Donnell of Banks.com says that as governments scramble for revenue, they inevitably look toward raising taxes on business, and that mindset has put the wisdom of being based in California in question. “In an age of highly mobile business operations and labor forces, you have to ask whether being based in a state that is already among the highest in terms of corporate tax rates and overall costs is best for shareholders. I believe we’ve hit a tipping point, and politicians would be wise to rethink whether they can continue to raise taxes on business without suffering tax revenue repercussions.”

The Search for Capital

In years past, the internal issues that CEOs felt would affect revenue growth varied little. The management team, new technology and new-product development all ranked among the top factors that corporate leaders pointed to as drivers of revenue growth. This year an answer choice never before offered on the survey — financing availability — tops the list as the internal factor that will be much more important to revenue growth through 2010. A half-dozen factors — new-product development, strategic partnerships, and advertising and marketing, among them — were downgraded in importance as CEOs focused on weathering the financial crisis. “When companies find that their normal sources of funding are gone because some of the major lenders — hedge funds, other nations, for example — are no longer in the system, that creates a problem,” says New York Community Bancorp’s Joseph R. Ficalora. “As a result, we’re seeing massive decreases in spending by good companies that need to preserve cash. This is not reflective of any wrongdoing on their part, but rather the fact that about 60 percent of the available funding that used to be in the system has evaporated.”

The issue of financing is especially crucial to smaller companies. More than half of the CEOs at companies with market caps of less than $250 million say their ability to find financing will have the greatest impact on revenues, compared with just 19 percent of chiefs at companies valued at $1.5 billion or more. But as the “banks begin to stabilize,” says Vanderbilt’s Hans Stoll, “the concerns over getting financing will begin to fade. Most banks have been providing financing to good prospects throughout this crisis. What’s been taking up the headlines are the troubled banks that were trying to shore up their cash positions and were not lending.”

Page 1 2 | PREV // NEXT