TORONTO, July 23 /CNW/ - A little over a year ago, Canadian private
companies were full of optimism about the strength of the Canadian economy and
their business profitability. A full 77% of private business leaders reported
they expected business to get "a lot or a little better" over the year. Since
then the economy has taken a turn and business leaders are now scrambling to
figure out how to get through the times. However, according to
PricewaterhouseCoopers (PwC), there are ways that private companies can
navigate through the good, the bad and the ugly of an economic downturn.
Factors such as inflation, the strong Canadian dollar, a weakened US
economy and a shrinking Canadian one, dropping consumer confidence and job
losses in the manufacturing sector are leading many of the country's private
business leaders to scramble for ways to make sure their companies are among
the survivors. But according to PwC, companies can implement strategies to
ensure their survival and remain agile and resilient.
"During a downturn, don't just cross your fingers and count on tomorrow
being a better day," says John McKenna, partner and senior vice president in
PwC's Corporate Restructuring and Advisory practice. "Private companies should
plan for the worst and may even be able to take advantage of the opportunities
that downturns offer and come out even stronger, by being proactive and
implementing a number of short and long-term strategies."
PwC recommends six key long-term and three short-term strategies to help
private companies navigate the storm during a downturn.
1. Know and focus on your core strategic advantages
2. Identify your key customers-and their risks to you
3. Prepare for the actions of your competitors
4. Develop a detailed budget model and update it frequently
5. Use a systematic approach to identify potential cost-cutting areas
6. Protect your liquidity
1. Be careful with new customers or large orders from existing customers
2. Actively monitor your existing customers' accounts receivable balances
3. Prepare weekly cash flow forecasts
Details on these strategies can be found at
This is the first in a series of articles from PwC that aim to help
private companies increase their understanding of some of the critical issues
and opportunities that can affect the performance of their business. PwC's
2008 Business Insights(TM) Survey, an annual survey that analyzes the opinions
of private business leaders and provides benchmarking for similar companies,
will be available after the summer.
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