- Nearly three in five private companies are confident about the U.S. economy, continuing their 18-month optimism streak.
- More than one-third of them plan major new capital investments, the highest percentage in over two years.
- The majority of private companies also plan to increase headcount, but minimally, via targeted hiring.
Private companies that sell abroad are feeling positive as well. An overwhelming majority (92 percent) believe that the world economy is either growing or staying the same. Only 8 percent of these companies ̶ the lowest percentage in years ̶ describe the global economy as slowing.
“Despite the United States’ weak GDP performance early this year, private businesses see resilience in the economic recovery, both at home and globally,” says Rich Stovsky, U.S. leader of PwC’s Private Company Services practice. “This confidence is evident in the survey respondents’ strong revenue growth projections, which they put at over 8 percent for the next 12 months, with more than one-third of them expecting double-digit growth during that period.”
Capital Spending Is Climbing
Private-company leaders say they plan to invest an average of 8.4 percent of their sales in capital projects over the next twelve months, signaling a real bet on long-term growth. Just once in the past several years have we seen so high a level of spending commitment (10 percent in 3Q13). “During the economic downturn, we saw opportunistic companies invest strategically in capital projects to gain a competitive edge and spur faster growth,” says Ken Esch, a partner in PwC’s Private Company Services practice. “Now that the economy has stabilized, many of their peers are playing catch-up, investing in deferred maintenance, infrastructure upgrades, and emerging technologies to enhance their own growth.”
In asking a subset of private-company leaders about their technology investments, the survey found the following:
- Seventy-five percent of Trendsetter companies believe technological advances will deliver a moderate-to-major impact on their operations over the next several years, with 44 percent of respondents expecting a major impact.
- Seventy percent of companies plan to invest in technology that will automate operations and increase productivity.
- Sixty percent plan to strengthen their cybersecurity.
- Fifty-seven percent say they’ll devote their IT dollars to data management and analytics.
- Forty-two percent expect to focus their tech spending on researching and engaging customers.
Private Companies Seek Talent through New Business Initiatives
Finding qualified workers continues to challenge private companies, with nearly one-third (32 percent) of the survey respondents citing this as a barrier to growth. And so although a healthy 56 percent ofTrendsetter private companies say they’ll add employees in the coming year, they intend to do so conservatively, planning to increase their headcount by just 1.8 percent as they continue to search for the right people with the right skills – at the right place and cost
The search for skilled workers is affecting more than just private companies’ HR policies. It’s influencing a variety of business initiatives, too. For instance, when geographically expanding Trendsetterbusinesses were asked why they’re heading into new U.S. markets, they said that tapping a better skills base was their top reason. They reported much the same when asked why they’re pursuing M&A, joint ventures, and strategic alliances – 54 percent said their chief objective was to access skilled employees.
“The survey results remind us that workforce planning needs to be tied closely to a company’s business objectives,” says Esch. “The overall number of anticipated hires may be small, but if the vacancies are for critical roles? An inability to fill those could quickly turn into a growth obstacle for businesses.”
Additional Survey Findings
- Two-thirds of Trendsetter companies also plan to increase operating expenditures across a range of areas, including new products and geographic expansion.
- The rate of major capital expenditures is sharply higher for companies selling abroad than their domestic-only peers – 46 percent versus 27 percent.
- International companies also project higher revenue growth than their peers – 9 percent versus 7.3 percent
Each quarter, PwC's Trendsetter Barometer® tracks the business issues and best practices of America’s leading privately held businesses. This quarter's report incorporates the views of 205 C-suite officers (CEOs/CFOs): 118 from companies in the product sector and 87 in the service sector, averaging $355 million in revenue/sales, and including large, $500M-plus private companies.
Logos, product and company names mentioned are the property of their respective owners.