Strategy

Edgy Optimism at Fast-Growing Companies

Two-thirds are using a planning cycle of one year or less.
Stephen TaubJuly 22, 2004

Chief executive officers at fast-growing companies are cautiously optimistic about prospects for the economy.

Nearly three-quarters of these CEOs expect the economy to continue expanding for at least the next two to three years — yet two-thirds are using a planning cycle of one year or less.

These are the major findings of a PricewaterhouseCoopers survey that interviewed the CEOs of 392 privately held product and service companies. These companies — which had been “identified in the media as the fastest-growing U.S. businesses over the last five years,” according to PwC — range in size from approximately $5 million to $150 million in revenues.

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PwC pointed out that despite the overall cautious, short-term view, 89 percent of respondents replied that their company’s ability to meet primary business objectives over the next 12 to 24 months is either excellent (39 percent) or good (50 percent). This optimistic group also expects revenue growth of 21.6 percent over the next 12 months.

During the next 12 to 24 months, 82 percent of respondents plan to hire more permanent, full-time employees; 72 percent expect to invest more in training. Next on their priority lists: obtaining better terms from suppliers (49 percent) and seeking new suppliers (48 percent).

Looking ahead, 83 percent conceded that they are concerned about at least one major business or strategic risk. The most common concern: the possibility of an economic downturn (43 percent), followed by keeping/attracting key employees (37 percent) and maintaining the quality of customer service (28 percent).

Two-thirds of respondents are concerned about at least one major operational risk. The most common: selling practices (24 percent), management judgment (23 percent), and productivity levels (22 percent).