Robert A. Kolb is the market president of Rhode Island at TD Bank, having been named to the position in January 2010. He oversees growth and expansion of all business lines for TD Bank’s operations in Rhode Island. He has 30 years of banking experience and also serves on the Amos House board of directors. He began his career in commercial banking after graduating from the University of South Carolina. Eventually, he became the market president for TD Bank in Massachusetts.
A recent TD Bank survey indicated many companies are looking at 2012 as a year of optimism and opportunity. PBN recently spoke to Kolb about the survey and current economic outlook.
PBN: Your survey says that three-quarters of financial decision-makers at mid-sized companies expect sales to increase over the next 12 months despite “economic headwinds.” Why do they expect increased sales?
KOLB: The small and middle market businesses that have survived and thrived through the last few years have generated strategies to cope with an uncertain economy. Operations are consolidated, expenses curtailed, and financial processes streamlined. They’re lean and mean, and are positioned to do quite well as the economy improves, or to react if it remains mixed. In particular, companies that provide nondiscretionary products and services have proven somewhat resilient, and could do even better as consumers’ purchasing power increases.
PBN: What does this say about being in a “down economy”? Is it, in fact, a down economy, and if it isn’t that bad, is it self inflicted?
KOLB: It seems more to be “uncertain” than “down.” It has been a tough few years for many businesses. Financial decision makers are extremely cautious, but have learned to cope. They recognize that while there are macro factors beyond one’s control, a company may be positioned well regardless of whether the economy is down, up, or mixed.
PBN: CFOs are confident in the prospect of their own companies but not about the U.S. in general. Why?
KOLB: The optimism isn’t driven by expectations for an improvement in the economy generally, but by operational and strategic improvements at the companies themselves. They’ve preserved their cash and are poised to improve and deploy it well, regardless of the macro prospects. Our region is uniquely suited to private company growth, particularly in access to capital and to a highly educated, talented work force. The public sector in Rhode Island and Southeastern Massachusetts has a large presence, but it would be a boon to the region to grow private sector employers, expand the tax base, and reduce the burden on local government.
PBN: If CFOs believe the outlook is so bright, what risks does the American economy face?
KOLB: The barriers to entry for entrepreneurs is very high. The high levels of uncertainty – on taxes, regulations, policy changes, the election – all affect business owners and managers. The risk stifles innovation and the decision to move forward with investment, in that opportunities this month may look very different in the autumn. Capital is available to Rhode Island’s small-business and the middle market, but it is essential that small businesses and startups have a good environment in which to grow. We need simplicity so companies are more confident to take risks, expand and hire more people.
PBN: What do CFOs perceive as their strengths and weaknesses over the next year?
KOLB: CFOs and companies that have weathered the storm over the last few years did so by streamlining their business models and by paying close attention to their balance sheets. Their strength is visible in their position to invest and grow as the economy improves. Their weaknesses are somewhat uncontrolled by the uncertainty that comes with an election year’s fractured political environment. Questions about what municipalities are going to do with taxes, public services, unfunded pensions, healthcare, and social services weigh heavily on the minds of all business owners. As the political climate and financial strength of public services becomes more clear we will see investment from existing companies and we’ll see a lot more entrepreneurs and small business owners jump into the pool. TD itself is a strong institution and well-positioned like many of the businesses who have survived in a difficult market. We have the ability to expand access to capital and provide financial services through new stores and new jobs, and we will be ready as entrepreneurs ramp up operations and existing businesses invest their cash reserves. A CFOs strength is in their company’s operational and financial positions; the weakness is in hesitating to exploit those strengths fully in an uncertain climate.
