TORONTO, July 23, 2008 — 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 weather the storm during a downturn.
Long-term strategies
- Know and focus on your core strategic advantages
- Identify your key customers — and their risks to you
- Prepare for the actions of your competitors
- Develop a detailed budget model and update it frequently
- Use a systematic approach to identify potential cost-cutting areas
Short-term strategies
- Be careful with new customers or large orders from existing customers
- Actively monitor your existing customers’ accounts receivable balances
- Prepare weekly cash flow forecasts
Details on these strategies can be found at www.pwc.com/ca/businessinsights.
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® Survey, an annual survey that analyzes the opinions of private business leaders and provides benchmarking for similar companies, will be available after the summer.
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,200 partners and staff in offices across the country.
“PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.
