Growth prospects for Canadian private companies better than expected, says survey
Toronto, ON -- Initial survey results from PricewaterhouseCoopers’ (PwC) Business Insights survey show t...
Toronto, ON — Initial survey results from PricewaterhouseCoopers’ (PwC) Business Insights survey show that almost 60% of Canadian private companies are striving for growth in the next year, up from 55% in October of 2008. Furthermore, the survey shows that 61% of all companies expect their business to do better in the next 12 months, up significantly from 44% in October of 2008.
For the fifth year, PwC surveyed Canadian private companies on their business confidence, strategies and outlook. In 2008, to address the rapidly-changing economy, PwC conducted the survey twice – in July 2008 and in October 2008. This latest survey was conducted in June 2009 and included the responses of 466 privately-held Canadian companies.
When looking at company strategies in different provinces today versus July 2008, the previously highly optimistic West is now more in line with the rest of the country with the percentage of companies striving for growth in Alberta dropping from 85% to 57%.
In the East, the number of companies focusing on growth has seen the smallest shift since July 2008 when compared to the rest of Canada. In Ontario, companies focusing on growth declined from 74% to 55% and in Quebec from 71% to 52%.
“While the economy certainly tops the list of challenges that private companies are facing, our survey results are showing that the impact the economy has had on private companies is not nearly as severe as some may have thought,” says Eric Andrew, leader of the PwC Canada Private Company Services practice. “Compared to a year ago, the number of companies fighting for survival has only increased from 19% to 23%. There are still a lot of companies out there focused on growth.”
Of those companies that are striving for growth, the majority are focussed on external strategies to do so including improving sales and marketing (82%), increasing market share gain (75%) and developing new products (72%). These three areas are consistent across all provinces.
Of those companies looking to consolidate this coming year, there was a significant increase in the number of companies focusing on process improvement (from 55% to 88%), driving it to the number one strategy for those consolidating. There was also an increase in the number of companies focusing on cash flow.
Meanwhile, 84% of companies that are fighting for survival plan to focus on reducing overhead expenditures, followed by improving staff efficiency (82%) and improving processes (77%). The biggest increase versus last year is in reducing staff (from 38% to 60%) and rationalizing product lines, markets or facilities (from 19% to 49%).
“Knee jerk reactions, like cutting staff, are not always the best solution. When people are worried about their jobs, productivity suffers. That’s the last thing you want in a downturn,” notes Andrew. “It’s important to listen to your employees and remove the barriers that get in the way of people doing their job. Give them the ability to control their day. That’s how you keep people engaged and wanting to do their best.”
The full PwC Business Insights data and report will be published in the fall of 2009.
For more information about PwC’s private companies services, visit www.pwc.com/ca/pcs