Among mid-sized companies in Canada and globally, there is a positive outlook regarding 2021, according to Grant Thornton’s latest Global business pulse index.
Results reveal that Canadian mid-market businesses are relatively confident about the recovery of business performance over the next year.
One year ago, Canadian businesses from coast to coast were shut down to help reduce the spread of COVID-19. Over the last year, we saw businesses struggle, many were forced to permanently close, others tried to reinvent themselves by investing in new technologies and changing their business model. Yet, in the midst of all this, half of Canadian mid-market businesses are optimistic about the recovery of future business performance as stated in Grant Thornton’s latest Global business pulse.
“Canada proved its resilience and ability to innovate during the pandemic by implementing various measures to support Canadian businesses. Canada is renowned as an open-minded, politically stable, culturally diverse country with strong entrepreneurial values and a talented workforce,” states Emilio B. Imbriglio, Raymond Chabot Grant Thornton’s President and CEO.
Grant Thornton’s global index findings
Grant Thornton’s global business pulse is the only index to track the business health of mid-market organizations worldwide. The latest index results draw on interviews with 5,000 mid-market business leaders between October and December 2020. This index result provides a timely snapshot of business health amid a challenging environment in which COVID-19 dominates the agenda, vaccines are announced and where businesses look to the year ahead.
Overall, despite rising by more than 6pts. in H2 2020, the global business pulse index score for Canada remained in negative territory with a score of -5. However, the improvement in the headline index was similar to the global aggregate score, which also rose by 6pts. to -4. Although improved, it is still the second-worst result since the index records began a decade ago.
Businesses confidence in strong sustained growth
As the results show, Canadian businesses are notably more optimistic, compared to the end of H1 2020. This rise in optimism is primarily being driven by the approval of a COVID-19 vaccine and its roll-out in the next year. With revenue, profit and export outlooks looking more positive, the index also reveals a decline in economic uncertainty, leading to a more hopeful future and recovery for businesses across Canada.
Additionally, according to the Financial Post, Bank of Canada Governor Tiff Macklem also recently released a statement stating that Canada’s economy will see a solid rebound in coming months as COVID-19 restrictions are loosened. An expected ramp-up in vaccination is boosting confidence in sustained strong growth into 2022. As more Canadians are vaccinated, the hardest-hit segments of the service industry will be able to begin resuming operations, resulting in strong job growth.
Rebalancing investment priorities towards more traditional categories
While more hopeful about future growth, Canadian businesses are still acutely aware of the challenges that they still face due to the pandemic. To position themselves for recovery, leaders are reprioritizing their investments as well as updating their long-term visions and plans. As the index suggests, compared to the rest of the world, Canadian businesses increased investments in staff skills and technology, as opposed to more traditional new buildings or plant and machinery.
Our experts attribute this to a number of factors. Many companies had put off investment during the course of the pandemic and are catching up. Others are investing to be ready for the expected uptick. Nonetheless, investing in technologies and strengthening a business plan with a digital transformation strategy is a must to remain competitive nationally and internationally post-COVID. In the past year, many businesses have updated their business strategy and invested in new technologies, which will result in a post-pandemic market that will be very different from the pre-pandemic situation.
Want to know more about developing a digital transformation strategy, consult our Evolution page.
COVID-19 has changed the world on many levels; it shifted the economy and forced businesses to adopt major changes. For some, this may be an opportunity to reinvent themselves and move towards new goals. For others, it may be a little more challenging to picture their business’s future.
Our experts are here to support the relaunch of your activities and help you adapt this new normality.
Grant Thornton’s Global business pulse is the first index to track the health of mid-sized companies at a global, regional, country and sector level. Here is more information on the methodology.
10 Mar 2021 | Written by :
Jean-Philippe Brosseau is a management consulting expert at Raymond Chabot Grant Thornton. Contact...
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There are several accounting considerations the COVID-19 pandemic has triggered in relation to IFRS 9, Financial Instruments. One of the most significant is in relation to hedge accounting and highly probable cash flows. A key criterion relating to cash flow hedges over forecast transactions relates to the requirement for the hedged cash flows to be highly probable.
During the COVID-19 pandemic, an entity therefore may need to consider if the hedged cash flows still meet the highly probable assessment.
The publication COVID-19: Hedge Accounting Insights explains the highly probable assessment and what entities should do if the cash flows are no longer highly probable.
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Mergers and acquisitions (business combinations) can have a fundamental impact on the acquirer’s operations, resources and strategies. For most entities, such transactions are infrequent and each is unique. IFRS 3 Business Combinations contains the requirements for these transactions, which are challenging in practice. The standard itself has been in place for more than ten years now and has undergone a post-implementation review by the IASB. It is one of the most referred to standards currently issued.
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Updated on February 17, 2023
How do you plan for your business’s future in this unique environment? First and foremost, you need to undertake a strategic diagnosis to help you take stock, solidify your foundations and get pointed in the right direction.
The pandemic has shaken organizations. Entrepreneurs have had to be very flexible and creative in order to continue their activities.
While we can expect a return to normalcy in the coming months, a new reality is taking shape that requires adaptation. The first step to better respond to the changing market and sustain and even grow your business is to know where you stand.
Strategic Planning for a Well-Prepared Garden
Consider the example of a well-prepared garden, with enriched soil and appropriate plants—the crop will be all the more plentiful. Similarly, a richer and carefully crafted diagnosis will more clearly define the right course of action and show the next steps a business should take.
An objective and truly honest 360-degree diagnosis is designed to help you analyze your business’s various organizational functions and identify opportunities and threats that are specific to its field of activity. It synthesizes and interconnects strengths and weaknesses (internal environment) as well as opportunities and threats (external environment).
Here is a brief summary of some of the numerous tools and techniques that can be used to complete the diagnosis.
Set up a work plan
To maintain the focus on the main goal and avoid becoming overwhelmed by too much information, it is essential to set up a work plan that sets out the most important questions you may be asking:
- What is your market share?
- What markets are growing?
- What products are the most in demand?
- What are the latest consumption trends?
- Who are the most innovative players on the market?
- How does the market perceive my business?
The next step is to identify what sources of information are available. In some cases, these numerous sources require some resourcefulness. For instance, you may have to search for specific conference papers, or the particular findings of a specialized study on horticultural science. Other sources require a more complex analysis, like the reports published by Statistics Canada; Innovation, Science and Economic Development; or workforce sectorial committees.
However, these data can be highly beneficial to help you get clear insight into your organization and the issues it faces.
Secondary data
Secondary data are external, public or private, available data (whether free or not). They can consist of information gleaned from published studies or research, official statistics, scientific articles, reports, in short, existing literature.
These data are useful for various aspects of the diagnosis, to get a better idea, for example, of:
- business trends in a specific sector,
- growth expectations,
- consumer spending,
- competition factors.
Benchmarking is another tool that helps companies to compare their own situation to that of their main competitors in terms of criteria, such as:
- the range of products and services,
- rates,
- distribution methods,
- marketing.
If questions remain after consulting secondary data, you could consider collecting your own primary data.
Primary data
Primary data pertaining to your clients, suppliers, competitors and partners can be directly collected using various techniques, such as interviews, surveys, focus groups, mystery customers, etc. How primary data are collected depends on your business objectives, the level of precision sought, as well as time constraints to collect the information.
Assessing all information collected on the company’s external environment will enable it to capture market opportunities and understand potential threats.
As an example, let’s take a look at how the Lafleur Greenhouses could collect primary data to answer specific questions on the competitive environment (download the example).
Internal diagnosis
When conducting a diagnosis, it is also important to take the internal pulse of the organization by collecting useful information on its main strengths and weaknesses. To objectively assess the current situation, it is essential to have a global vision of the points of view of the employees and not just management.
This part of the investigation can be conducted as interviews or focus groups, but it is paramount to select the right method and ensure that participants can freely speak their mind in a constructive atmosphere to propel the organization forward. Here are a few examples of questions to ask in this context:
- What are the company’s main strengths?
- Which ones can be further developed to increase leverage?
- What are the company’s main weaknesses?
- What could potentially impede its growth?
- Are all company products and services relevant?
- Are you successful at fulfilling your mission?
- What could you improve?
- What do you know about your clients’ needs, satisfaction and expectations?
- What should you improve?
A neutral and objective external party could be useful in facilitating the exchange of ideas and information during this process.
Consulting other stakeholders could enhance your internal profile of the company. This could include suppliers, financial or strategic business partners, your Board of Directors. They can provide different, impartial insight—as external players they may compare your situation to that of competitors they deal with.
The focus of an internal diagnosis is to address all your organization functions, including sales and marketing, finances, operations and human resources. The need to adjust quickly can also lead organisations to question their governance, their technological environment and even their cybersecurity. Thus, it’s important to ask questions to address all aspects, in order to draw the most exhaustive profile possible of the company.
Preparing the global diagnosis
Many tools are available to analyze the information collected, and guide you through an in-depth analysis of interrelations between your findings. The most famous is the SWOT method, which provides a global, internal and external, profile of the organization.
For strategic planning purposes, it is important to understand what strengths to leverage, what weaknesses to work on, what opportunities to capture and what threats to consider and to define a strategy that reflects all of these factors. It is also important to connect each aspect by answering certain questions, which can provide very important insight:
- What strategies are based on your strengths to leverage opportunities?
- What strategies help offset your weaknesses and leverage opportunities?
- What strategies enhance your strengths to address threats?
- What strategies minimize your weaknesses to avoid threats?
Lastly, the diagnosis helps outline your true ability to implement your growth vision . Organizations may sometimes have high ambitions, but a careful analysis can reveal specific obstacles to overcome before they can reach their objectives. This is the purpose of the diagnosis.
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