CEOs of private businesses are less optimistic than they were a year ago about the strength of the global economy – and their own organisation’s ability to grow revenues. This is according to research of over 800 private business owners as part of PwC’s 22nd Annual Global CEO Survey.
Only 33% of private business leaders are very confident about growing revenue in the coming 12 months, compared with 38% of executives in publicly traded companies. Although 43% of private business CEOs expect the global economy to improve over the next 12 months, as many as 30% expect it to decline, compared with only 6% in the previous year’s survey.
According to the survey results only 32% of private businesses are likely to pursue a merger or acquisition compared to 43% of public company respondents. Consequently, private businesses are more likely to look inward for organic growth – achieved through operational efficiencies and new products or services – rather than enter new markets.
Gert Allen, PwC Partner, Africa Private Company Services Leader, says: “In last year’s Annual Global CEO Survey, private business leaders were much more optimistic about the future. But this year is different; external volatility has resulted in a more tempered outlook for company growth – especially compared to that of publicly traded companies – and pessimism when it comes to macroeconomic growth.”
But instead of being downbeat, private businesses should use this period of uncertainty to prepare for a significant shift that could determine their place in the commercial landscape in the near future. Particularly for family owned companies based in developed economies, the next decade will see one of the biggest intergenerational changes in history, with a baton passing from baby boomer founders to their millennial successors. This shift will bring significant impact and change the landscape of private businesses.
Two interrelated themes of this year’s CEO Survey point to steps that private businesses should take in order to put themselves in an advantageous position over the coming years.
1. The right talent can make a difference
The talent crunch is an overarching concern in this year’s survey. Almost two-thirds of private business leaders are finding it more difficult to hire workers, with more than one-third ‘extremely concerned’ about the availability of key skills. This shortage impacts innovation, customer experience as well as the company’s bottom line.
The survey states that private businesses have a number of advantages when it comes to recruiting the best talent and the right skills. For retention they can draw on the equity of shared values that have already been built in the workforce. Private businesses can also invest in their employees’ ongoing success by continually training them, ‘up-skilling’ and rewarding them.
2. Technology can reshape your business
Technology tools, such as Artificial Intelligence (AI) and data analytics, and tech-related threats, such as cyber-attacks and IP theft, are rapidly changing. Although private businesses enjoy a degree of flexibility that can support innovation, this is one area where publicly traded companies have the edge over their counterparts.
The generational change afoot brings opportunity to both modernise and improve the business. The next generation is inherently better suited to function in a world where the moving target of technology is inseparable from nearly every other facet of the business. Private businesses need to be congisant of their tools that are developing and may be coming online – and be ready to spend on them at the right time.
Many private businesses have a decided edge in the most important challenges of the next few years, even in the midst of uncertainty. This includes advantages in developing talent, implementing the right technology for the business, and making quick and nimble moves to pounce on opportunities. These advantages are responsible for the longevity and resilience of many private businesses.