TORONTO, October 24, 2007 — PricewaterhouseCoopers’ (PwC) 2007 Business Insights™ Survey reveals that Canada’s private companies continue to be confident and profitable despite the US economic slow down. And while this is good news, the survey also shows that the fastest growing companies are young, innovative and willing to take risks, painting a worrying picture for any business content with the status quo.
According to the survey of 420 Canadian private company leaders, the fastest growing companies are more likely to be under 10 years old and much less likely to be more than 20 years old. Furthermore, once companies have been operating for more than 50 years, they are more likely to show decreasing profits, top-line shrinkage and increasing pressure from competition.
But age isn’t the critical factor, it’s the tactics businesses are using at different stages of their life-cycle. Companies with increasing profitability and top-line growth of more than 15% report they are participating in an innovative range of activities which are contributing to their success, including selling or sourcing overseas, generating revenues from new sectors, entering new markets or developing new products and having a significant percentage of staff working on innovation related projects. The survey also shows that once businesses have been established for more than 50 years, they are also most likely to report that they “do not innovate.”
“All companies would do well to take a closer look at the behaviours exhibited by the most successful companies and consider what they need to do to reinvigorate their business approach,” says Eric Andrew, PwC’s Private Company Services Canadian leader. “Business leaders concerned about what they may lose with higher risk ventures must also consider what they could lose by carrying on with business as usual.”
The Business Insights Survey also followed up on some key trends seen in previous reports and introduced new topics of discussion. These include:
Outlook
Confidence among private business leaders in Canada remains solid. Seventy-seven percent of respondents report they expect business to get “a lot or a little better” in the next twelve months.
The biggest change from 2006 was the drop in the number of Albertans reporting they expect business in the next 12 months to “get a lot better.” In 2006, 45% of respondents gave this response but in 2007 the figure has fallen to 26%.
Challenges
Labour is the primary challenge respondents expected to face in the next year but again there were wide regional differences. In Alberta 61% of respondents rank it as one of their three biggest challenges, which is down slightly from the 65% who cited it as a problem in the last twelve months. The spread of responses is more even in Ontario with labour, currency and the economy cited by a similar percentage of respondents.
Growth Strategies
For the third consecutive year, growth and expansion is the main strategy for Canadian companies. Overall, 75% of companies are striving for growth in the next 12 months up from 70% last year.
The survey shows that over 40% of respondents are looking to expand into new markets as a short- and medium-term strategy and half of all companies sell and/or source overseas. The number one reason for their overseas activity was to access a larger market for products and services.
Andrew adds, “Canada’s private companies, particularly those in the fastest growing and most successful groups, are leveraging international opportunities with good results.”
Corporate Social Responsibility (CSR)
The survey found that while 76% of respondents agree there’s a business benefit to having sustainable business practices, only one in three think the costs of sustainable operating practices outweigh the benefits. Only 16% are running a CSR program in their community, 62% don’t have a policy for sustainability and 43% don’t even consider it in their long-term planning. Finally 41% of respondents don’t think climate change will ever impact their company.
“Companies who are early adopters in addressing their environmental impacts can build Canada’s next competitive edge. The challenge for businesses is to find innovative ways to turn these forces to their advantage,” concludes Andrew.
For more information on the 2007 Business Insights Survey please contact
or visit www.pwc.com/ca/businessinsights.
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