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Deloitte Survey: A Majority of Global Private Companies Expect Revenue Growth to Increase Over Next 12 Months, Powering Optimism

 

Deloitte survey finds most private companies leaders expect improved revenue and productivity, more investment and hiring despite trade and cybersecurity concerns

Published: 6 June 2019

With disruption rewriting traditional business operations, private business leaders remain steadfast in their optimism about the year ahead. In its second report on this important market segment, “Global perspectives for private companies: Agility in changing markets,” Deloitte details that despite market challenges, three-quarters of private business leaders express high or extremely high confidence in the success of their private firm over the next 24 months.

In a survey of 2,550 private company leaders across 30 countries, Deloitte found that the majority of respondents anticipate growth in six of eight key business metrics in the next 12 months.

"Private business leaders don’t necessarily view today’s disruption as negative, but rather as offering new opportunities for growth. Although they are rightly concerned about issues like trade, it is encouraging to see this level of optimism," says Zhao Jian, Deloitte China Best Managed Companies Program Leader. "The faith of private companies in their perennial strengths—developing new products, services and business models, and high productivity—remain intact."

When asked about the major risks to their growth, just under a quarter of respondents put trade barriers and cybersecurity at the top of the list. However, when asked about prospects for their companies, the results were overwhelmingly positive.

Proactivity is catalyzing productivity

Technology has brought business closer to its customers but it has also upended business models. It has driven efficiencies but also fostered uncertainties. To address these conditions, firms globally are not staying idle but considering (43%) and implementing (40%) new business models to navigate disruption.

In conjunction with exploring new business models, companies are also looking for ways to improve growth. Globally, the top two strategies for firms are increased productivity (29%) and new product/service development (24%). Interestingly, these same two categories rank as the top competitive advantages.

Talent as the differentiator

Despite advances in adoption and implementation of technology, private business leaders realize their employees can be the differentiator and are investing in them through the following initiatives: 39% are devoting assets to training programs, 35% are increasing the number of full-time employees and 33% are investing in leadership development.

In order to attract and retain employees, 4-in-10 firms plan to reimagine learning and development programs using experiential formats, develop strategies to build an inclusive workforce, and increase their focus on flexibility and well-being programs.  

Social purpose fuels corporate profits

With the influence of social media and the rise of employee activism, the majority of private business executives recognize that having a strong company culture is not a “nice to have” but a “need to have.” More than three-quarters (77%) of survey respondents agree that culture is strategically important to the success of the business.

Culture encompasses much more than the activity happening within a business and private company leaders today recognize this new reality. Specifically, the concept of social responsibility is resonating with private firms worldwide, with 66% viewing it as a top or high priority for their organization. To make the most of these initiatives, organizations are focusing on corporate strategy as well as employee and customer branding to separate themselves farther from the competition.  

Conducting business across borders

Regardless of business size or industry, technology has blurred borders and provides every company with the ability to be a global enterprise. In fact, the top driver cited for M&A activity over the next 12 months is the opportunity to enter new global markets (39%). The survey found that many private business executives expect to conduct an aggressive merger and acquisition strategy, with 42% believing it is likely or very likely they will participate in an acquisition in that timeframe.

This potential expansion comes in the face of uncertainties ignited by global trade tensions. While 24% of global respondents view trade barriers as a significant risk to growth, it is not at the expense of private business’ optimism: 15% of respondents cite entry into foreign markets as their company’s main growth strategy over the next 12 months.

"Private companies are aware of disruption, but they need to do more than just acknowledge it," explains Zhao. "Despite some areas of uncertainty, private businesses remain the engine behind the global economy, fueled by their agility and ability to innovate. To continue to thrive, they need to consider issues including how they are organized to cope with disruption, how they develop leaders and attract talent, how they can best tap global markets, whether through M&A or organic growth."  

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