As companies around the world reposition themselves for a post-pandemic future, 90% of surveyed Cincinnati-area private companies are cautiously optimistic about meeting business projections over the next 12 months, according to data from the 2021 Deloitte Cincinnati 100 survey. Additionally, more than 70% of the companies surveyed expect the US economy to grow between 2% and 5% in the next 12 months.
It’s a bullish outlook, as Cincinnati’s private companies plan to grow despite the challenges inherent in a dynamic and uncertain economic environment.
Revenue holding steady, M&A activity expected to increase
Since last year, the Cincinnati 100 have held their own from a revenue perspective. The combined revenue of the top 100 companies was $43.9 billion in 2021, compared to last year’s $43.6 billion, a steady showing despite the economic turbulence caused by the pandemic. In fact, 44% of companies surveyed expect an increase of more than 11% in gross sales/revenues over the next year.
Like 2020 and 2019, the majority (58%) of Cincinnati 100 companies are family-owned. Interestingly, more than 50% of this year’s companies surveyed are looking to grow through acquisition. This is a significant change from the previous year when only 20% of companies were considering M&A.
Performing better than their peers
Our survey results indicate that the Cincinnati 100 are faring better than private companies in other parts of the country when compared to the 2021 Deloitte Private survey, which polled 2,750 executives at mid-sized companies about their plans for becoming more competitive in the current economic environment.
Specifically, over the next 12 months, 91% of Cincinnati 100 companies expect revenues to increase, while only 69% of US-based private survey participants share this optimism. Cincinnati 100 companies are also planning larger investments in technology and talent, with 70% planning to invest in leadership development versus just 39% of US-based private survey participants.
10-year growth trend holding strong
The Cincinnati 100 portfolio has shown impressive growth since 2011. Ten years ago, just two companies reported more than $1 billion in revenue. Currently, this number stands at eleven companies. Companies reporting more than $500 million in revenue also increased significantly, from sixteen companies in 2011 to twenty-six today.
This strong growth speaks to Cincinnati’s fertile economic ground, marked by a supportive business climate, access to top talent, and a thriving university system.
People are still a top priority
According to those surveyed, Cincinnati 100 companies’ headcount declined 4.5% compared to last year, raising some concerns about talent acquisition and retention. However, the combined headcount of the top 10 companies reportedly grew to 26,800 from 24,300 in 2020.
Despite changes to the workplace and the workforce, surveyed Cincinnati companies remain committed to retaining employees as they look to create new human capital frameworks. More than 80% of companies surveyed have increased compensation and benefits for existing as well as new employees. As hybrid and remote work models seem here to stay, approximately 60% of companies surveyed are implementing new technologies to harmonize the need for connection and collaboration with flexibility and accommodation.
The survey data suggests that Cincinnati’s private businesses have successfully navigated the impact of the COVID-19 pandemic and are confident in their strategies and business models for the future.
With supply chain disrupted, new strategies emerge
Supply chains have been negatively impacted across the globe, and the Cincinnati 100 companies were no exception. Survey respondents saw the cost of raw materials skyrocket while business models were disrupted. Not surprisingly, 71% of Cincinnati 100 companies reported an increase in operating costs.
In response, Cincinnati 100 companies surveyed are evaluating new and innovative ways to address supply chain challenges. Driven by greater global complexity and the enormous stress that has been placed on networks — from higher customer expectations to dynamic delivery solutions — companies are rethinking the long-held orthodoxy that supply chains exist simply to meet the commercial needs of the business. Instead, leaders are now making supply chain considerations central to business strategy.
Companies are investing big
Cincinnati 100 companies are continuing to invest in organic growth, as well as in acquisitions, human capital, real estate, and enabling technologies, including automation, data analytics, and business intelligence.
The bottom line? These investments can help position Cincinnati 100 companies for continued resilience as they move confidently toward the future.
Tom Plaut is a partner of Deloitte Tax LLP and is the Cincinnati Deloitte Private leader. The data in this column is based on survey responses from the Deloitte Cincinnati 100 companies and Deloitte thoughtware. Percentages are based on number of respondents to each question and rounded to the nearest whole number.
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