External volatility impacting private business CEOs' confidence, part of PwC's 22nd CEO Survey trends series
Two notable results stand out in the more than 800 private business CEO responses to PwC’s 22nd Annual Global CEO Survey: first, chief executives running private businesses —about one-quarter of which are family-owned —are less confident about their firm’s growth prospects than their counterparts at public corporations, and, second, they are also less optimistic about global economic growth. Consequently, private business CEOs are more likely to look inward for organic growth —achieved through operational efficiencies and new products or services —rather than enter new markets.
Many private businesses have a decided edge in the most important challenges of the next few years, even in the midst of uncertainty. This includes advantages in developing talent, implementing the right technology for the business, making quick and nimble moves to pounce on opportunities, and viewing the world through a longer lens than what the next quarter will bring. These advantages are responsible for the longevity and resilience of many private businesses.
"Private companies should use these uncertain times to reassess supply chains, customer relationships and employee satisfaction. Businesses that strike the right balance to deliver products and services quickly and cost effectively during challenging times will build long term competitive advantage."
With private business CEOs being less optimistic about the future, this may lead to cautiousness that could in turn impede the future growth potential for private businesses. Consider the sharply lower percentage of private businesses likely to pursue a merger or acquisition, when compared with public company respondents (32% and 43%, respectively). Is that inward-looking stance a disadvantage? Can a nimble private business find a hidden opportunity in pursuing an acquisition target—especially if it can keep its capital structure and debt position under control? In those cases, M&A that provides access to an adjacent market could make sense, particularly because competitors may be more reluctant to make bold moves.
Almost two-thirds of private business CEOs are finding it more difficult to hire workers, with more than one-third ‘extremely concerned’ about availability of key skills.
But in the hunt for the best people and the right skills, private businesses have a few inherent advantages, which they would do well to focus on. For retention, draw first on the equity of shared values you’ve already built with your workforce: loyalty and trust is easier to develop in private businesses. Invest in your employees’ (and your own) ongoing success by continually training them, ‘up-skilling’ them and rewarding them. For recruiting, actively solicit your people’s buy-in and offer flexible work arrangements to lure experienced, inactive workers back into the fold. You can also seek a competitive edge by investing some of your ‘patient capital’ in attractive compensation packages. If you are a family business, draw on the home-grown talent in waiting and work to advance your next generation of leadership.
"Companies are offering flexible working arrangements, job-sharing activities and retraining to help their employees obtain the skill sets necessary to work in today’s environment."
For all companies, staying on the leading edge—to both advance and defend the enterprise—is extremely hard to do. Technology tools, such as AI and data analytics, and tech-related threats, such as cyber attacks and IP theft, are changing at a far faster pace than the skills of your workforce.
The generational change afoot brings opportunity to both modernise and improve the business. The next generation is inherently better suited to function in a world where the moving target of technology is inseparable from nearly every other facet of business operations.
Global Leader - Entrepreneurial & Private Business, Partner, PwC Australia
Tel: +61 3 8603 3183
CEE Leader - Entrepreneurial & Private Business, Partner, PwC Poland
Tel: +48 5 0218 4277