Innovation key to continued mid-sized business growth, survey says
GE research suggests revenues growing two times faster than GDP.
TORONTO — Two-thirds of mid-sized Canadian businesses have seen improved company performance, revenue and job growth, and expect this upward trend to continue over the next 12 months, predicting mean revenue growth of 7.2%, according to GE Capital’s Canadian Mid-Sized Business Outlook survey.
That’s about twice the nominal Canadian GDP growth rate projected by the Bank of Canada.
The companies surveyed are generally confident in their local and national economies, in spite of concerns about the global economy. Company leaders are also upbeat about the future of their industries. over the next year, 38% said they expect their industry to expand and 37% expect new order pipelines to grow.
Executives are also investing in their businesses, with 35% saying capital expenditures will increase over the coming year. More than one-half (52%) say they’re likely to introduce a new product or service and an equal percentage say they’re likely to upgrade equipment.
Despite the signs indicating a positive trajectory for the Canadian market, there are concerns about increasing cost structures, which are causing margin pressure. While 43% also say they intend to increase pricing of their firm’s products or services, more 51% expect pricing to stay flat.
Innovation is a very high or moderately high priority for more than three-quarters (76%) of these firms. They’re working hard to anticipate market disruptions and benefit from rapid changes in their industries. Sixty-four per cent say they expect to garner at least 10% of their revenue from products introduced in the past three years.
Acknowledging that even small innovations can yield results, 31% say the biggest impact on company performance comes from improvements to existing products or services.
Industry-level findings include:
Automotive: Innovation is expected to play an increasingly important role. A majority of survey respondents expect light vehicle sales to increase over the next year. Current capacity utilization averages 79%.
Energy and mining: Companies are experiencing rapid revenue and employment growth – trends they expect to continue. In addition, they expect improvements to existing products and services and more sustainable practices to impact the industry in the future.
The national survey included interviews with senior-level financial decision-makers at 224 privately-held and publicly-traded companies with gross revenue of $5 million to $1 billion.