KPMG LLP says despite concerns that the economy might be headed for recession, Canadian small and medium-sized businesses are planning for growth in the next three years. The firm says companies are in fact banking on this outlook.
Of the 503 business owners and executives surveyed between August and September this year, 83 per cent say they are optimistic about their company’s growth, 82 per cent felt confident about their industry or sector and 78 per cent thought Canada’s future economic growth prospects look good.
The firm’s Global CEO Outlook found a similar sentiment among Canadian CEO respondents who were also bullish about their long-term growth prospects.
Another test of resilience
“The current economic turbulence is another test of their resilience as most business leaders prepare now to set up their businesses to weather the coming storm,” says Mary Jo Fedy, national leader with KPMG Enterprise. “Many are drawing on their recent experiences and have ambitious plans to grow rapidly as the economy rebounds.”
The survey further found that 73 per cent are feeling more confident about their growth prospects than a year ago and 77 per cent plan to hire more in the next three years to drive growth. Of those surveyed, 20 per cent expect their hiring to increase at least 11 per cent.
To mitigate growth risks, 61 per cent say they are taking pre-emptive action to recession-proof their businesses. Among these respondents, 85 per cent said they are boosting productivity, 83 per cent say their firms are identifying inefficiencies and operational complexity and 82 per cent said they are focused on managing costs. KPMG adds that 52 per cent of respondents believe the recession will be relatively mild and short-lived.
The research also discusses digital transformation plans. Among those surveyed, 60 per cent say they expect to pause their digital development plans in the next six months – likely a temporary approach, as 69 per cent admit they are concerned they will lose their competitive advantage without ongoing investment in this area.
Threats to growth
Findings also show that leaders view rising interest rates as their top-most threat to growth in the coming years, followed by heightened cybersecurity risks. Environmental, social and governance (ESG) ambitions are also probed in the survey, with 54 per cent saying they are struggling to tell a compelling ESG story. The firm adds that nearly one third don’t have an ESG strategy at all.
Finally, KPMG says at last check, 72 per cent of all small and medium-sized business leaders and 78 per cent of family-owned businesses are planning to develop a succession plan in the next three years, a transition, that KPMG says may actually come to pass more quickly than anticipated as a result of the pandemic and growing retirement numbers.