8 minute read 19 May 2021
EY - Waterfall house

How do you preserve what you’ve built to thrive in what comes next?

By David Fabian

Canadian EY Private Leader

Focuses on assisting clients expand and diversify their business units across borders. Tennis player. Loves spending time with my two children and dog.

8 minute read 19 May 2021
Related topics Growth Innovation EY Private

Five key ways Canada’s private companies can embrace the unknown to unlock their ambitions

Rebuilding in a post-pandemic market can’t mean returning to what was. What comes next has to be about boldly embracing and adapting for a changed reality like nothing we’ve ever seen.

Make no mistake: major challenges persist. The extraordinary events of 2020 are transforming what we knew, and what we thought was possible. From the challenges of social distancing safely on the shop floor to managing the fallout of a seriously disrupted supply chain: there’s a lot keeping private business owners and senior executives up at night. For many, the fear of what could go wrong next is very real. But for even more, the relentless drive to simply keep going is momentum enough to continue making progress even in this tumultuous time.

EY - Top strategic priorities, next three years

What’s working? To better understand both the large-scale challenges private businesses face and leading practices that are seeing them through, EY and (E) BrandConnect, a commercial arm of The Economist Group, surveyed 150 CEOs, CFOs and senior executives at private companies with annual revenues ranging from CDN$50m to over $1b. Across industries in the Canadian market, we heard stories of common struggles and uphill battles. What was loud and clear was a set of key themes these ambitious leaders are focused on to level up results now and keep building for the future:

  1. Growth and digital transformation top the strategic agenda.
  2. Entrepreneurs are working to win the long game.
  3. Agility is the word of the day. 
  4. Finance, technology and data analytics go hand in hand.
  5. Outside help offers new opportunities.

There’s a lot to consider. Emerging technologies are now absolutely imperative. Balancing short-term priorities with long-term management is critical. Optimism is the rallying cry your people need. In a world of competing priorities, the decisions and investments leaders make now have never mattered more.

Here, we’ve paired our findings with critical takeaway questions you can ask to capitalize on what’s working and unlock pathways to resilience and recovery. Because with the right strategies in place, Canada’s private businesses can lead the charge in reshaping what comes after what’s next. And that puts all of us in very good hands.

   

EY - Factory technician with mask on
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Chapter 1

Growth and digital transformation top the strategic agenda.

What are we hearing?

In spite of the COVID-19 pandemic, more than 75% of executive respondents peg growth – organic or inorganic – as a top strategic priority over the next three years. From one industry to the next, Canada’s private enterprises are looking to trigger growth by setting themselves apart in new markets and spaces. Even so, balancing ever-evolving business needs at home with the time and resources it takes to explore new markets has CEOs losing sleep.

Despite the will, finding a way continues to be tough for 79% of execs who say they’re just somewhat prepared to pursue strategic priorities. Driving continuous innovation becomes even more prescient on the digital transformation front. Even those who may be resistant to the scope of such transformation understand the significance of investing in new technologies as a way to propel growth and tackle new markets. In fact, some 63% flagged digital transformation, including building up technological infrastructure and data analytics as top strategic priorities for the next three years.

The services that are demanded by clients continue to change both in type and delivery. As a result, there’s a constant effort to evaluate the benefits and try to keep pace ultimately with the competition.
Peter Virvillis
CFO, Haywood Securities
 
What does it mean?

Digital transformation is a key ingredient to growing and staying current. By embracing a digital mindset and new ways of working behind the scenes, you can automate processes, pull better insight from the data, and enable teams to focus on longer-term priorities. That, in turn, can help grow your business.

How can you act on this now? Start by asking questions like:
  • Where do our strategic growth goals and digital transformation intersect? 
  • What tools do our people need to enable growth now?
  • What barriers prevent us from pursuing bold growth opportunities, and could digital enable us to overcome them sooner?
 

   

EY - Woman in office with mask on
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Chapter 2

Entrepreneurs are working to win the long game.

What are we hearing?

Short-term challenges aren’t stopping Canadian entrepreneurs from pursuing long-term goals. In fact, despite the challenges of handling the COVID-19 pandemic over the last several months, entrepreneurs exude a spirit of resilience and are more determined than ever to launch into the recovery phase, growing from there.

EY - Most significant business challenges

Even so, their preparedness to go out there and make that happen varies. Major forces and megatrends — think broad economic uncertainty, regulation hurdles, cyber threats, increased competition and a changing geopolitical landscape — constitute real threats right now. Despite their determination, only one in five executives (21%) surveyed feels their business is very prepared to pursue growth in light of those challenges. A slightly higher proportion (23%) say they are not very or not at all prepared.

The pandemic is a tactical challenge, not a strategic challenge. Those of us who lived through SARS and H1N1 already had plans in place and knew what we needed to do. We’re simply executing our existing plans. My issues have not been personnel, but a lot more external. I underestimated when adversity hits how much employees ramp up their productivity and really come together.
Todd Van Vliet
CEO, Frac Shack
 
What does it mean?

Focusing on factors in your control can be a solid way to pursue growth and profitability in the face of so many uncontrollable forces. Looking inward to evolve systems, people, processes and support can help you think bigger and better across all the buckets where you can influence and effect change. Doing so now can prime your business to operate at best and highest use, and that helps you ride the waves of anything else that may come your way.

How can you act on this now? Start by asking questions like:
  • Where are the opportunities to improve operational efficiency in the organization?
  • How can we strengthen our balance sheet and tap into financial resources so we’re as ready as possible to seize opportunities as they arise?
  • From automation and artificial intelligence to pulling a clearer story from the data, where can we use technology differently to be even more strategic?
 

   

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Chapter 3

Agility is the word of the day.

What are we hearing?

Agility fuels adaptability, and that gives private businesses a leg up right now. Across sectors, private companies have a unique ability to pivot quickly, effecting change without jumping through as many hoops as their public or multinational peers. That’s making a real impact on their ability to execute well in the face of economic uncertainty and greater competition — and it shows in their confidence. More than 60% rate themselves above average across financial performance, operational efficiency and business strategy compared to industry peers. That’s a strong sign of optimism amid unprecedented economic, health and humanitarian challenges now sweeping the world.

The unknown is what really throws everyone off. But as soon as we’re in a steady state, we’ll be able to control costs and understand the fluctuations a lot more. We’re beginning to see a new normal where everyone is getting ahead of the problem as opposed to feeling like we’re fighting fires.
CEO, privately owned technology company with operations in Canada and the US
 
What does it mean?

Continuing to bank on agility can be a real differentiator for private companies nationwide. Whether adapting a direct-to-consumer business model, shifting gears overnight to pivot service offerings, or zeroing in on acquisition opportunities, the very nature of private companies fuels the ability to not only survive, but thrive. Building on that agile spirit to rally teams, engage employees and encourage intrapreneurship at the heart of your culture can empower your people to help identify opportunities and work collaboratively to move the needle in real time.

How can you act on this now? Start by asking questions like:
  • Are we giving our people a robust runway to innovate, and permission to try new things? 
  • What operational changes can we make now to open up the greatest potential tomorrow? 
  • How do we seize the right opportunities for strategic growth or new alliances?
 

   

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Chapter 4

Finance, technology and data analytics go hand in hand.

What are we hearing?

More than 80% of private company executives agree: finance’s ability to provide timely, strategic reporting is key to growing the business. In fact, that same number say the finance department must be more involved in board-level discussions on overall company strategy and decision-making.

EY - Finance-specific challenges

Even with 77% of leaders at the top of the house saying they’d like finance to be more of a strategic partner, challenges abound. Like many teams, finance is feeling the squeeze. The pressure to reduce costs and improve efficiency is real. That said, technology represents a real opportunity to automate behind-the-scenes operations and processes in a move to fuel front-of-house finance performance and support strategic contributions.

Some 81% of executives back that direction, saying with the technology available today, their organization should automate more of their financial operations.

Historically, our finance was always looking back. What we’re evolving into is that the finance function not only reports but tells our operational teams the key levers we can pull to improve the business. For us, it goes back to IT because you need systems in place to get the appropriate data into the format that helps operations improve.
COO, Privately owned multinational metal processor and supplier
 
What does it mean?

Finance has real line of sight and valuable skills that can fuel better decisions and contribute to growth. But they need better tools and support across the function to effectively tee their people up to contribute as leadership’s strategic ally.

How can you act on this now? Start by asking questions like:
  • Where are the opportunities to automate finance?
  • What kind of change management would we need to make this work?
  • Who internally can influence others to embrace the digital mindset?
 

   

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Chapter 5

Outside help offers new opportunities.

What are we hearing?

Outsourcing helps. Only 9% of private company executives surveyed weren’t already outsourcing some part of their business; more than 50% expect to outsource even more of their business going forward. There’s a strong sense (71%) that doing so will improve operations, deliver greater business agility, reduce operational costs and increase process efficiency and productivity.

EY - Areas where executives would seek external support

Executives also see outsourcing as a way to expand access to talent and expertise. By the numbers, leaders who rate their company as above average on financial performance are significantly more likely to say they expect to increase the amount spent on outsourcing compared to peers who rated their financial performance as average or below (61% vs. 41%).

IT operations, customer service support, legal and marketing services all emerged as prime outsourcing opportunities. Still, about half cite security or fraud risk as the main arguments against outsourcing certain functions like finance.

The key criteria are experience, knowhow and having the talent that doesn’t exist in our office — wisdom and knowhow that can be better than our own decision-making process,” says a managing director of a real estate firm. “We hire third parties to make us smarter. Our goal is that we only hire people smarter than us, so we always look and seek-out growth. It’s not a question of price. It’s how smart they are, and how capable they are, and is it worth it?
 
What does it mean?

Outsourcing holds real potential for private businesses looking to maintain momentum while re-evaluating cost centres amid broader market uncertainty. But getting this recipe right means assessing and mitigating any possible infrastructure gaps, cybersecurity risks and stakeholder concerns before diving in. Assessing your internal resources to understand what you have, and how your current capabilities align to your overall goals, is the first step to outsourcing effectively.

How can you act on this now? Start by asking questions like:
  • Which complementary skillsets do we need to reset our growth plans and focus on long-term recovery?
  • What parts of the business stand to gain the most by bringing the right skills into the right projects at the right time? 
  • Do we have the infrastructure, logistics and resources in place to support outsourcing?
 

How do you get from now to next and beyond?

It’s still too early to predict what Canada’s private businesses will look like as the lingering impacts of COVID-19 ultimately recede. What do we know for sure? Volatility, geopolitical issues and factors outside our control require businesses here to react quickly. Asking key questions now about how you’re operating, where your transformational opportunities lie and how you can seize them in the short term can have a positive ripple effect that extends well into the long term. Will you boldly look inward to answer those questions now, or wait and see?

Canadian entrepreneurs drive the market forward no matter the economic climate. No doubt, the success stories born and cultivated in 2020 will continue to have a lasting impact on the business landscape – and our EY Entrepreneur Of The Year® Awards — for years to come.

Ready to nominate a game-changing entrepreneur for our reimagined program in 2021? 
Visit EY Entrepreneur Of The Year Canada.

ABOUT THE SURVEY

This report gauges the overall business conditions and challenges of Canadian private businesses. In order to further its existing research efforts around mid-market Canadian private clients and the relevance of outsourcing financial processes and operations, EY Canada commissioned (E) BrandConnect, a commercial arm of The Economist Group, to conduct a survey.

This targeted survey of Canadian businesses explores the relevance of working with professional services providers and outsourcing internal functions given current market trends and business challenges. The 15-minute survey was conducted via online and telephone (CATI) methodology in January and February 2020 among 150 finance/tax decision-makers and other senior executives at privately-owned Canadian businesses with a minimum of $50M CAD in annual revenue.

The survey sample represents broad industry and geographic coverage of the Canadian market, with the majority of respondents located in Alberta, British Columbia, Ontario, and Quebec. Half of survey respondents were comprised of C-suite execs, with the remaining half from the director level. Surveyed companies’ annual global revenues were: CAD $50m to <$250m (48%); CAD $250m to <$500m (16%); CAD $500m to <$1bn (25%); CAD $1bn+ (11%).

Summary

It’s still too early to predict what Canada’s private businesses will look like as the lingering impacts of COVID-19 ultimately recede. What do we know for sure? Volatility, geopolitical issues and factors outside our control require businesses here to react quickly. Asking key questions now about how you’re operating, where your transformational opportunities lie and how you can seize them in the short term can have a positive ripple effect that extends well into the long term. Will you boldly look inward to answer those questions now, or wait and see?

About this article

By David Fabian

Canadian EY Private Leader

Focuses on assisting clients expand and diversify their business units across borders. Tennis player. Loves spending time with my two children and dog.

Related topics Growth Innovation EY Private