In 2022, private companies are facing the top growth challenges their peers face, brought on by uncontrollable factors such as increased inflation, COVID-19-related restrictions and policy shift uncertainty. In fact, private companies are often feeling these challenges to a greater extent than public companies, according to our most recent Pulse Survey of 678 business leaders from companies across a range of industries and sizes. The results revealed insights into executives’ top concerns and opportunities in 2022, the highlights of which are presented below. These include the need to adjust prices, strategize around talent and accelerate digital transformation.
Almost all private company executives we spoke to (92%) expect to raise prices this year, far higher than the 62% of all respondents that said the same. If companies are considering raising prices, that’s likely because costs are going up. For the first time in 30 years, private companies are struggling to control costs. Some private companies surveyed may not have the procurement capacity that larger public companies do and may not be as protected when costs of raw materials, freight and shipping rise.
Raising prices means thinking through how to do it, and 65% of private company respondents see reevaluating pricing strategies as critical to growth, far higher than all executives (49%). Private companies need to brace themselves because we predict that pricing challenges are going to take a turn for the worse before we see an improvement.
Meanwhile, supply chain woes are also still weighing heavily on private companies. More than half (54%) of private company leaders say supply chain disruptions present a huge risk to their growth goals, compared to 32% overall.
The top concern for private companies in 2022 is talent—finding the right talent and retaining it. For many private companies, especially manufacturers, talent includes laborers who are paid hourly wages and seek the best pay—sometimes from competitors based in nearby areas. Nearly all (92%) of our private company respondents tell us that hiring and retaining talent is very important to their ability to grow in 2022, compared to 77% of all executives we surveyed.
It’s worth noting that for private companies, growth often means entering new markets or releasing new products, which means that these organizations need to acquire new skills that enable them to grow in new areas rather than simply scale existing business domains. Fast-growing companies often don’t have the same size business organizations as larger companies and may not have the necessary depth of skills, or the same maturity of standard business processes or systems, and therefore tend to rely on the specific skills and entrepreneurship of the talent they hire.
Just over three-quarters of private companies say that talent acquisition and retention challenges are their top risks to achieving their goals in 2022. Only 24% of private company respondents told us they thought talent shortages would ease by the end of the year, compared to 31% of all other respondents.
But private company executives are taking action. They realize they have to make a stronger case to their workforce, and they’re implementing strategies to appeal to employees where it makes sense, like enabling more flexible work options (84%), increasing compensation (70%) and improving benefits (43%).
Like executives in all other companies we surveyed (60%), well over half (57%) of private company leaders say that capitalizing on digital transformation initiatives is very important to their ability to grow this year. A strong digital foundation can improve talent retention and acquisition.
Standardizing processes on popular digital platforms can help organizations attract experienced workers who want to continue using familiar systems and leveraging leading practices, and it can help standardize training and onboarding processes. Having advanced systems in place can also ensure that private company executives have up-to-date and accurate visibility into data–a requirement for those that want to adapt and be agile in a rapidly changing and increasingly competitive environment.
The current business environment presents unique challenges to private companies, requiring executives to place highest priority on areas like reevaluating pricing and supply chain strategies, attracting and retaining talent, and increasing agility to operate in a turbulent business environment. We’ll tackle these and other private company issues in future blogs. To tap into the connected perspectives that will help you uncover, untangle and understand what’s ahead, sign up for PwC’s Private Company Perspectives.