Two recent surveys of corporate finance leaders in Southern California revealed that while most businesses are reporting declining revenues and employment in 2009, four out of five of these finance executives expect recovery within the next two years, without widespread restructuring or business failure.

The Orange County Chapter of Financial Executives International (FEI) and local chapters of the Institute of Management Accountants (IMA) conducted surveys of their memberships in April and May, respectively.

Service providers are being hit harder than manufacturers, but even that sector shows signs of recovery. Kimco Staffing Services' CFO, Steve Bradley, reports, "Temporary staffing is a leading economic indicator. Our slowdown began in January 2008, flattened out over the last several months, and in May 2009 we started to see a slight increase. We anticipate a strong fourth quarter."

The IMA survey coordinator, Penn Post, President of Post Associates, noted that companies are employing a variety of cost cutting tactics to preserve cash and profitability. "Operational improvements are just as popular as expenditure reductions." He and Bob Eberlein, FEI survey coordinator, noted that companies are cutting labor costs, renegotiating costs with vendors, cutting back on discretionary projects, selling unproductive assets, merging departments, stepping up operational audits, and improving automation. Half of the respondents to the FEI survey are intensifying forecasting efforts to minimize surprises and one-third plan to secure outside financing to ensure liquidity.

Both surveys indicate that businesses are not in chaos and expect to recover. Nearly half of respondents have increased efforts to introduce new products. Prices are stable in their markets (72 percent in the FEI survey indicate no change in pricing strategy). Leaders are simultaneously optimizing current productivity and investing in future productivity. Many are investing in associate training, improving internal communications and other fundamentals. The management focus appears to be on cutting costs to remain profitable and acquiring market share in their core markets, while investing in new products and core processes at the same time.

While there is plenty of uncertainty, the surveys indicate that Southern California business leaders remain optimistic for the future. The Southern California market remains very diverse. As Troy Dunkel, President of the Orange County Chapter of FEI noted, this "allows us to absorb shocks better than so many communities with narrowly focused economies."

Chris Stiehl, President of StiehlWorks, a local market research firm, consulted on the projects. "The respondents on both surveys were anxious to share their ideas," Stiehl said. "The results represent the thinking of nearly 100 finance professionals in the area, but not necessarily FEI or IMA."