In many ways, these are good times for the owners of private companies in Canada. Interest rates remain near historic lows, and the economy continues to grow steadily. But many private company owners believe the times could be better still. A Deloitte survey of 350 private company owners and CEOs reveals that they are relatively optimistic about the future: 84% believe their companies could be worth significantly more than they are currently. A small proportion was even more bullish: 13% believe that with the right strategies they could increase the value of their companies by 100%.

The survey, entitled Canadian private companies navigating their way to success, also captures the challenges entrepreneurs face as they attempt to grow their companies. In fact, one in five companies identified “continued growth” as their top challenge. Recruiting and retaining employees and dealing with competition round out the top three challenges for private companies. How can owners and CEOs meet these challenges more effectively? The answer should begin with a “value thinking approach” that can put companies on the course to sustainable growth. Using the framework of the Enterprise Value Map developed by Deloitte, entrepreneurs will be better able to tackle key growth challenges, from talent management to strategy to competition.

Private companies need to engage all their employees
All too often, private companies are run on gut instinct and sheer determination. That may be fine at the outset, says Guy Barthell, a partner with Deloitte’s Strategy & Operations practice. But over the long term, managing a company without a clear and articulated strategy in place can lead to a host of problems that threaten the ultimate value of the business. Among them: the company may embark on a haphazard expansion plan, and talented employees may leave when they grow tired of erratic management. “After a while, your people will tend not to follow you because you change your mind too often,” says Barthell. “As you grow, you really have to focus.”

With the talent pool drying up, it’s important for owners and CEOs of private companies to address the staffing issue as part of their strategic plan. If a company is considering expansion, management must look out five years or more to determine their workforce needs and find ways to attract new people while retaining top performers. “If you want your company to succeed,” says Human Capital Partner Stephen Diotte, “you have to figure out what your needs are and what changes you need to make to fill the biggest gaps.”

Moreover, the talent crunch is occurring at a time when competition is not only growing — it’s becoming more disruptive. Lower-priced products from emerging markets are making inroads in markets that some private companies have dominated for years. “Thirty or 40 years ago, the universe of competition was local,” says Barthell. “But now we’re in a global economy. The competition is coming from everywhere.”

Various methods for tackling the competition
“Achieving sustainable growth isn’t just about competing against known competitors,” observes Barthell. “Growth also requires innovation and a constant search for new markets.” That may mean entering into strategic partnerships or in the case of international expansion, it may entail hiring a manager who has worked in that country.

While it’s important to respond to competitive pressures, private company owners should not overlook the untapped potential in their information technology systems. “When IT is installed to tackle a specific problem, its potential to increase efficiency is not always fully exploited,” says Stephen Mansfield, a partner with the Technology group. Similarly, companies need cash to grow, but they may lack the knowledge to leverage their financing effectively, or to wring funds out of existing cash flow.

With all of these challenges — maintaining a talent pool, responding to competitive pressure, uncovering IT efficiencies, optimizing cash flow — private company owners and managers clearly have many concerns keeping them up at night. In order to sustain the growth of their companies and ultimately drive business value, companies need to develop strategic plans that will engage their employees, take their companies into new markets, and deal effectively with the competition.