Entrepreneurs optimistic for 2010 - Ernst & Young - Canada

Entrepreneurs are among the most resilient people in business. So it’s not surprising that many not only survived the recession — they also found opportunities to grow their business. In fact, nearly two-thirds said the downturn did not have a strongly negative impact on their business.

• 35% said they were faring about the same as the year before, and 29% said they were actually doing better.
• 36% reported their overall performance was worse than the prior year.

• 42% of respondents were optimistic that the economy will return to normal growth rates in 2010.
• 28% were less optimistic, predicting a return to normal growth in 2011, and a further 19% said it would come no earlier than 2012.
• Recovery will be gradual for most companies, and fragile for many. The challenges faced along the way will vary by industry. The downturn opened up space in all local and global markets. Companies will have to adapt to the new circumstances — or risk being replaced by exceptional enterprises with the agility to adjust to the new reality.

• 49% of survey respondents said broadening their customer base and entering new markets were top priorities for driving growth. 24% planned to drive operational performance to in turn drive growth, while 16% were concentrating on attracting and retaining top talent.

  More than half of respondents (52%) said the downturn had no impact on their willingness to consider entering new markets.

  This is consistent with an earlier Ernst & Young survey of entrepreneurs. In the second quarter of 2009, we surveyed 3,100 winners and finalists of the Ernst & Young Entrepreneur Of The Year® Awards from more than 50 countries for our Seizing opportunities report. A majority were focused on pursuing new market opportunities, and nearly all (93%) were maintaining or increasing their focus on broadening their customer base and entering new markets.

• 35% of respondents said mergers and acquisitions represent a good opportunity to grow the business.

  53% said they did not postpone plans for a major transaction because of the financial crisis, while 32% did.

  Planned transactions spanned initial public offerings, private equity investments, selling the company and similar activities.

  26% of entrepreneurs cited exploring outsourcing/offshoring options as a key strategy, while a further 14% planned to raise capital from existing shareholders or markets.

  In times like this, opportunities abound. It’s crucial for Canadian companies to be capable of making and executing decisions quickly to take advantage of shorter windows of opportunity and to respond more quickly to adverse developments. But this doesn’t mean ignoring due diligence. In fact, now is the time to beef up due diligence and properly assess risk.

• 45% of respondents reported that generating cash is not a high priority for them over the next 12 months.

  This is a reassuring fact and shows that many Canadian companies are in a strong position and not worried about cash. It is consistent with our findings in our Seizing opportunities global survey from the second quarter of 2009, in which 40% of respondents said generating cash over the next 12 months was not an increased priority.

  Of course, regardless of their current position, companies need to continue to keep cash on their radar if they’re going to seize opportunities in the upturn. Growth is only possible for those with resources — entrepreneurs can only pursue their ambitions if their cash positions are secure.

• 26% of respondents reported difficulty in accessing capital in the senior debt market. Of that group, 37% had alternative financing options besides equity, asset-backed loans, subordinated debt or mezzanine capital.