Private companies expecting growth

July 22, 2009
by Purchasingb2b staff

Toronto—The majority of Canadian private companies are aiming for growth in the next year, despite the economic downturn, according to survey results from PricewaterhouseCoopers.

The research shows 61 per cent of private companies expect their business to do better in the next 12 months, compared to 44 per cent in the October 2008  study—though there were differences by province and region.

The survey, in its fifth year, was conducted in June 2009 and gathered responses from 466 privately-held Canadian companies.

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 per cent to 57 per cent.

In Ontario, companies focusing on growth declined from 74 per cent to 55 per cent, and in Quebec. the figure slid from 71 per cent to 52 per cent.

"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," said 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 per cent to 23 per cent. There are still a lot of companies out there focused on growth."

Survival strategies

Of those companies striving for growth, the majority are focused on external strategies such as boosting sales and marketing (82 per cent), increasing market share  (75 per cent) and developing new products (72 per cent). The three strategies were consistent across all provinces.

The data also showed 84 per cent of companies fighting for survival plan to reduce overhead expenditures, improving staff efficiency and processes. The biggest increase over last year is in reducing staff (from 38 per cent in 2008 to 60 per cent in 2009). Rationalizing product lines, markets or facilities went from 19 per cent to 49 per cent).

"Knee jerk reactions, like cutting staff, are not always the best solution,” cautioned Andrew. “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."