False bravado? Privately-held companies say business will get better over the next year but haven’t worried about the economy this much since ‘09

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Whether old, young, large or small, owners have something to learn from one another

TORONTO, September 12, 2012—More than three-quarters (77%) of privately-held companies say that their business is going to get better over the next year, despite economic performance being their chief concern. In fact almost two-thirds of owners expect a growth rate of 4% or more over the next year. This is according to early results from Business Insights 2012, PwC’s latest study on the ownership, performance and issues of over 400 Canadian private companies.

Top issues and problems in the next twelve months: 2012 Total
Economy/lack of activity 32%
Competition/discounting 31%
Labour shortages/recruitment of skilled staff 25%

Tahir Ayub, PwC’s Canadian Private Company Services Leader comments, “Not since 2009 has the economy been cited as the top concern of private company owners. In last year’s study the economy didn’t even make the response list of top three concerns. This is an indication that continuing economic uncertainty could be creeping into the thinking of owner-managers and precipitating more worry.

The top reasons why owners say they think business will get better: improved sales (66%), more market share (50%) and strong company forecasts (49%). Interestingly, over a quarter of respondents (26%) also say they just have a “gut feeling” things will get better.

Size matters...
Mid-size company owners (under 500 employees) see themselves faring better than their larger counterparts do – more of them expect their business will get stronger by the middle of 2013 (80% versus 69% of companies with over 500 employees).

Smaller companies (up to 100 employees) seem to be the most optimistic, with over half saying their expected growth rate is higher this year than what was achieved in 2011 (51% versus 33% of companies with over 500 employees).

... and age isn’t just a number
Newer companies (operating less than 20 years) also see better prospects for themselves and are more in tune with nurturing innovation. Eighty-five per cent of newer companies see things looking up versus 73% of companies older than 20 years. Younger companies also more frequently have an approach to identifying good ideas and putting them into action (85% versus 75% of companies older than 50).

The longer a company has been in operation, the more they are currently focused on reducing costs and the harder it appears for them to grow their client base, more than half (54%) of companies over 50 years old are focused on cost containment and 33% of them are having issues finding new clients. “It’s typically harder for more established companies to expand their customer base significantly, but they should not lose sight of the importance of continuing to innovate.”

Ayub says, “Owners of larger more mature companies and newer, small to mid-sized companies have something to learn from one another. While more established companies may have the resources and experience to back them, the level of complexity within a bigger organization makes them less willing to take the risks and accept the failures of their youth and they could lose out on opportunities.”

He continues, “On the flip side, we’ve seen that once a smaller company reaches around the $100 million revenue mark, an owner can’t and shouldn’t rely on gut feeling as much as they may have in the past. They need to start thinking about putting in the kind of infrastructure and tools which are going to help them and their management team take their business to the next level.”

About Business Insights
The eighth annual Business Insights®: The Survey of Canadian Private Companies examines issues affecting privately held companies including ownership, foreign markets, current & future performance, innovation, leadership and talent. In the summer of 2012, we surveyed over 400 leaders of Canadian privately-held companies from a broad range of industries. The full report will be available on October 23rd, 2012. A copy of the report (when available) and access to early results, charts and infographic are available from the media contacts. Data is also available for the 406 respondent companies by revenue, number of employees, age and region. For more information, please visit: www.pwc.com/ca/businessinsights.

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About PwC’s Private Company Services (PCS)
More than 65% of PwC Canada's clients are private companies, ranging from high net worth individuals to owner-managed family businesses and large, professionally-managed businesses. PwC's Private Company Services (PCS) group is a dedicated team of business advisors who help private company owners resolve day-to-day business issues and achieve long-term success. PCS offers the perspective of a third party with professional industry knowledge, business consulting, tax and accounting expertise. For more information about PwC's Private Company Services, please visit www.pwc.com/ca/private.

About PwC Canada
PwC Canada helps organizations and individuals create the value they’re looking for. More than 5,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with close to 169,000 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.

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