KPMG Enterprise™

Dennis Fortnum

Dennis Fortnum
Canadian Managing Partner,
KPMG Enterprise

When the economic crystal ball is cloudy

How easy it would be to have a better early warning system that could help business owners navigate important decisions during prolonged economic uncertainty. Entrepreneurs are the economic canaries in the coal mine. They are the first to feel constraints when there is an economic downturn and they are the first to turn more optimistic when conditions improve. That’s why KPMG Enterprise joins with Ivey to tap into the experiences and insights of QuantumShift ™ Fellows semi-annually.

Entrepreneurs signal better times ahead

As bad economic news trickles in day after day – with some of the flow more torrent than trickle – it’s wise to remember that the economy is a marathon, and like any of the world’s great races, some years the average finishing time is slower than others.

But every year there’s a healthy group of runners who set a personal best. They are the pacesetters of tomorrow.

Similarly, it’s hard-charging Canadian entrepreneurs who are setting personal growth bests with their businesses, even as many larger organizations seem to be running in molasses. They have a very different view – a much more growth-oriented view – of the near future than the CEOs of larger and more entrenched Canadian companies, and that difference may be a signal of better times ahead.

The entrepreneurs in this case are 320 graduates of QuantumShift – the Richard Ivey School of Business/KPMG Enterprise leadership program, who lead companies with average revenues of about $25 million and an annual growth rate of 25 per cent. The C-Suite respondents are 160 executives from ROB 1000 companies in the manufacturing, service and resource sectors.

The biggest difference between the two groups is that almost one-third more Canadian entrepreneurs expect to be hiring than their C-level compatriots. The numbers come from the Ivey Entrepreneurs Index, which found that 81 per cent of the high-energy entrepreneurs it surveyed are planning to hire more employees over the next year, compared with only 56 per cent of executives in the quarterly C-Suite survey.

Like the entrepreneurs, the CEOs are a confident lot. Nearly all of them expect their revenues to increase in the next year. The entrepreneurs are a little less sanguine about the prospect for growth of the Canadian economy overall, with only two-thirds expecting it. In comparison, three-quarters of the C-suiters foresee economic growth over the next year.

More entrepreneurs anticipate they will bolster their balance sheets with external financing – 44 per cent—compared with just 29 per cent of the C-Suite executives who think they will seek additional funding.

But the differences in their plans to hire more employees is more than statistically interesting. It is a bellwether for economic recovery. It’s a signal that, just as Peter Drucker observed more than 25 years ago, “the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”

For Canada, this ability to exploit change is more important than ever. We lost 54,000 jobs in October and Finance Minister Jim Flaherty recently said that, in light of global economic turmoil, GDP growth projections for the country have been revised downward. Among the many fears dotting the U.S. economic landscape is the realization that despite GDP growth, slow though it has been, job growth is not keeping pace.

As Peter Morici, former chief economist at the U.S. International Trade Commission, recently wrote: “Anecdotal reports indicate that businesses are cutting back. They don't expect a recession but are gearing for persistent subpar growth in the United States, slower growth in Asia and virtually no growth in Europe. Reflecting this assessment, companies …. have announced plans to cut costs further, even as they meet modestly growing demand. That means lower head counts, which could start a negative feedback cycle.”

Not the Ivey entrepreneurs. They’re bolstering their work forces.

“These Canadian entrepreneurs are consistently confident in their ability to grow their businesses,” explains Stewart Thornhill, executive director of the Pierre L. Morrisette Institute for Entrepreneurship at the Ivey business school. “They believe they can sustain success, even if overall economic conditions deteriorate.”

Entrepreneurs have the ability to see, understand and take advantage of evolving markets, says global strategist Mona Pearl. They are able to think differently, use insights, see what others don’t, envision what doesn’t yet exist, and identify opportunity when it’s ripe. These, she says, are the prized qualities of today’s entrepreneur.

The QuantumShift entrepreneurs achieve steady, high growth rates because their focus goes beyond the immediate future. They monitor their business models and re-engineer them when necessary to keep their companies sustainable and to build them over the longer term.

That’s exciting news, even if only as a tonic to other gloomy scenarios. But I’m sure it’s more than that. Working with these entrepreneurs I have learned to never underestimate their ability to make things happen, and that is reason for optimism.

Special to The Globe and Mail, published with permissions

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Join Us ...

Join Us ...

At KPMG Enterprise™, we are interested in your business success. Our aim is to arm you and members of your management team with the latest developments and best practices that you can apply to your private company.

Next Private Company Seminar Series national webcast: Your economic crystal ball.

We’ve gathered a panel of leading economists, Craig Alexander – Senior VP and Chief Economist at TD Bank Financial Group and Ted Mallett – VP and Chief Economist at Canadian Federation of Independent Business, to discuss their

views and expectations of Canadian economic performance specifically with an eye towards possible business implications for private company owners and entrepreneurs. Management teams will gain an interesting panorama of the current economic and business environment in order to be able to manage their companies effectively in changing times.


Wednesday, January 18, 2012


1:00 pm (Atlantic)
12:00 noon (Eastern)
11:00 am (Central)
10:00 am (Mountain)
9:00 am (Pacific)


45-minute – Presentation
15-minute – Q&A

Click here register with our compliments

Visit to browse the seminars available in your city and register online to any that capture your interest.

Business Adviser is published by KPMG Enterprise™ specifically for owners and executives of private companies. KPMG Enterprise is devoted exclusively to serving the needs of private companies in Canada. For further information about how KPMG Enterprise can help private companies, visit

Business Adviser



Business Adviser is published by KPMG Enterprise™ specifically for owners and executives of private companies. KPMG Enterprise is devoted exclusively to serving the needs of private companies in Canada. For further information about how KPMG Enterprise can help private companies, visit