Canada's private companies more focused on growth: PwC

Survey shows 66% focused on growth strategy; 63% striving for growth rate of up to 9% in 2010

TORONTO, Oct. 25 /CNW/ - The 2010 Business Insights® survey issued by PwC shows that Canada's private companies became lean and fit during the recession, and are poised for growth in the coming year. The survey results indicate that 66% of respondents cite growth and expansion as their strategy for the coming year, compared to 58% in 2009. 

When it comes to targeted growth rates for the next 12 months, Canadian private companies are setting some pretty significant targets - 63% of respondents set a growth rate of up to 9%, while 33% set a growth rate of 10% or more. Most surprisingly, 24% plan to grow by 15% or more, up from 9% last year.

Overall, there is a feeling of optimism among Canadian private companies, with 83% of respondents expecting business development to get a little or lot better over the next year, up significantly from 61% last year.  

"Most private companies are striving for some level of growth, with a good number planning for quite aggressive growth. They've been through the worst of the downturn and have used that time wisely by fine-tuning their strategies and are ready to expand. While some economic uncertainty remains, growth is definitely back on the agenda," says Tahir Ayub, Canadian Private Company Services Leader, PwC.

Perhaps the biggest revelation from this year's findings comes not from the fact that Canada's private companies are planning for growth, in many cases significant growth, but in how they plan to achieve that growth. Maintaining and gaining market share by taking it away from competitors is a key strategy for the over half (53%) of this year's respondents. Private company leaders are listening to their customers, learning what they can do better and keeping prices as low as possible in order to pass those savings on to their customers. They know their competitors are doing the same. 

Competition was cited (by 40%) as the top issue that will affect their company over the next year, trumping the economy's spot as number one last year, followed by the economy (35%), and profitability (26%).     

Globalization has increased the number of players in Canada and the recession has left everyone tightly controlling their purse strings. This combination has created a new business landscape—one that is becoming hypercompetitive. It is no longer business as usual. In fact, there is a new business as usual that requires private companies to be exceptionally cost-effective in order to keep and attract customers and still manage to return a healthy margin, says Ayub.

"There has been a perfect storm of heightened competitiveness based on the realities of globalization and local competitors that have fiercely competed for market share during the recession. In order to compete, having a low cost structure is going to be a new 'business as usual,'" says Ayub.

"In this new environment, what are the key strategies needed to ensure you are competitive? Keep your customers happy. Make sure you deliver value. Stay focused on continuous improvement," says Ayub. "In many ways, it's a continuation of the basics—except highly intensified."

Canadian private companies are less interested in foreign market expansion this year. Only 27% say they will grow by entering a new foreign market. "While this is not a sustainable option, with the U.S. and European markets still struggling, driving growth at home has some merit in the short-term while conditions are better in Canada," says Ayub. However, Ayub also offers a word of caution, "If we don't improve our reach into other parts of the world, we will find other parts of the world increasingly expanding their reach into Canada and it will be tougher to compete."

The sixth annual Business Insights Survey examines issues affecting Canadian private companies. In the summer of 2010, over 200 leaders of Canadian private companies completed the survey from a broad range of industries. The sample is concentrated around four provinces - British Columbia, Alberta, Ontario and Quebec.

Please visit www.pwc.com/ca/businessinsights for more information on the Business Insights 2010 survey, including:

• A copy of the full Business Insights report
• Regional "On-the-Ground Observations" reports for British Columbia, Alberta, Ontario and Quebec
• In-depth interviews with the leaders of select private companies - Golden Boy Foods Ltd., West Canadian Industries, Budds' Group of Companies, and Cardinal Couriers Ltd.

About Private Company Services (PCS)

More than 65% of PwC Canada's clients are private companies, ranging from high net worth individuals to owner-managed family businesses and large, professionally-managed businesses. PwC's Private Company Services (PCS) group is a dedicated team of business advisors who help private company owners resolve day-to-day business issues and achieve long-term success. PCS offers the perspective of a third party with professional industry knowledge, business consulting, tax and accounting expertise.

For more information about PwC's Private Company Services, please visit www.pwc.com/ca/private

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