Market overview
The May 2011 edition of the PwC Private Business Barometer revealed that private business owners are reinvesting in their businesses to prepare for long-term growth.
Private businesses are planning for the future. Businesses are realising they cannot rely purely on organic growth as their sole growth strategy. They are now looking at acquisitions, new product markets and geographic expansion to help them achieve their growth targets. Two in five (40 per cent) private businesses are planning to expand into new product markets and 29 per cent plan to expand into new geographic markets within Australia.
Likewise, 17 per cent nominated expansion into new geographic markets overseas as one of their growth strategies.
Private businesses told us they reviewed their business plans more frequently. Half of businesses (54 per cent) review them more than once a year. This edition shows 94 per cent of businesses have a plan that is closely aligned to their growth strategy. This is pleasing to see and a good business practice to maintain.
We encourage private business owners to ensure their business plans have the necessary elements to enable them to stay on their growth path. At PwC, we believe the core elements of a strategic plan include:
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| It’s essential that you keep yourself accountable and that everyone in the business knows what the plan is and their role in supporting it. In the retail sector, 39 per cent of businesses have no plans to engage in e-retailing. Australia has experienced rapid growth in online shopping and we believe there is an opportunity for retailers to engage their customers online. We believe an investment in the technology and tools to market products and services online makes good business sense and is the way of the future. The hunger for growth is evident by private businesses reinvesting profits back into their businesses to prepare for long-term growth. Many private businesses are investing in marketing, sales and operational efficiencies. More than half (56 per cent) of private businesses reported their sales increased over the past 12 months whereas one quarter (25 per cent) experienced a decrease in sales. The PwC Private Business Barometer has revealed that attracting and retaining talent remains a challenge for private businesses. More than half (59 per cent) of private business said they intended to hire new staff in the next six months. The number of private businesses not hiring has decreased from 64 per cent in 2008 to a new low of 35 per cent. |  | The primary challenge for businesses is finding competent staff. Four out of five private businesses expect wage costs to increase over the next 12 months by an average 6 per cent. As a result, private businesses are executing strategies to attract and retain talented staff. In addition, nine in ten (92 per cent) businesses have a mix of retention strategies in place for key staff. Pay-related strategies and flexible working hours rate highly as practices to attract and retain staff in private businesses rather than their competitors. The PwC Private Business Barometer revealed that competitive pricing is a growing challenge for private businesses, behind funding and finding competent people. More than one-third (38 per cent) of private businesses reported that in an increasingly competitive environment, pricing is a key challenge for them. The PwC Private Business Barometer highlights that private businesses are cautious about how they spend their money and are steadily reinvesting to create growth to help them achieve their future targets. There is an immense opportunity for private businesses to plan and execute an investment strategy and by doing so, create change and long-term growth. |