Private companies might avoid these growth hazards by targeting specific projects, building momentum behind them, and accelerating their completion. Another issue for private companies is that they may not have the people in place to accomplish their growth goals, a problem they may compound by recruiting too soon or hiring people who lack the skills for the job. Sharper risk assessment to help them understand the long-term implications of capital-spending decisions and managing the risk of implementing programs remain challenges for many private companies.įaced with limited capital options and tightening credit markets, some companies are tapping working capital credit lines for long-term investments and to fund operating losses. Speed in decision-making is effective only if the company defines the desired priorities and maintains its focus.Īt the same time, private companies may also compromise performance and future growth by cutting into capital programs. Companies will have to be more selective in the projects they undertake. This will likely reduce capital availability going forward, as lenders and investors become more cautious in their commitments. “Although private companies have enjoyed an attractive financing environment for some time, today’s markets bring greater uncertainty due to global economic and political volatility and greater regulatory restrictions on sources of capital.” “Capital availability is a challenge for many privately owned companies,” says Andrew Luetchford, a partner in M&A Advisory. In tight markets, companies look for ways to reduce their cost structures, and they may create too many initiatives for their organization to handle. In seeking growth opportunities, private companies should remain focused on efficient uses of their capital. That’s raising the stakes for Canadian private company leaders in deploying capital and seeking to maximize the use of existing assets and resources. In Deloitte’s latest survey of US private company executives, growth in capital spending slowed significantly as other business metrics, such as profits and prices, moderated. While the Canadian economy continues to expand at a moderate pace, continued depressed commodity prices led most especially by oil, political uncertainty and slackening demand overseas, threaten to ripple through global trade and decrease confidence. Private companies face particular challenges as they try to expand their businesses in today’s uncertain business environment.
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