Revenue generation is on the minds of Canadian entrepreneurs and they’re committing to building their businesses over the long term. As well, they’re making more money than before.
The new insights come from PwC‘s annual emerging companies report for 2014: “Building tomorrow’s giants”. 90 Percent of respondents had less than 25 employees while three quarters reported less than $500,000 in revenue, making it a bit more of a startup-centric report.
PwC saw a significant jump in the number of companies reporting earned revenue this year, suggesting that Canada’s emerging companies are in a maturing period. Just over half (51 percent) of companies earned up to $1 million in revenue last year, a rise from 33% the prior year.
The Canadian market remains the main focus of companies’ revenue generation efforts: 62 percent of revenue is generated domestically, down from 68 percent the previous year. The US portion of companies’ revenue increased slightly to 25 percent up from 23 percent.
Digital is the core sales strategy for 70 percent of the companies surveyed and over half of companies surveyed (58 percent) report generating three-quarters of their revenue or more through online sales.
“Companies aren’t pursuing revenues at all costs, however,” read the report. “CEOs are paying increasing attention to metrics such as customer (up from 23 percent) acquisition cost and average revenue per customer. This suggests a maturing attitude towards growth—and recognition that revenue quality is an important factor to consider.”
PwC outlined these main points to consider in growing revenue:
Adopt a global mindset. Canada’s a great place to launch and build a business, but there are great opportunities for growth worldwide. The US market is the default second choice for many companies, but it’s very sophisticated and incredibly competitive. In assessing the market potential for your market or service, don’t neglect markets overseas—all it takes is one opportunity to set you on the path to building a global business.
• Leverage your people and personal networks. Emerging companies often feel they lack the connections they need to explore international markets. But in a multicultural country like Canada, the key to opening doors worldwide could be on your advisory board—or even sitting down the hall. Start building your international network with your team and follow up on their personal connections. A vital international contact could be just a few degrees of separation away.
• Use government resources. Canada’s Export Development Bank, Trade Services Commission and Canadian consulates worldwide can offer a wealth of information—much of it at no cost—about markets worldwide, as well as support for companies interested in doing business abroad.
• Learn from companies in other sectors. There are many, many Canadian companies who do business globally, from manufacturers to retailers and others. Talking with leaders at these companies, and using their insights and experiences can help you chart your own path into international markets—and avoid potential mistakes others have made. This holds true for domestic opportunities as well.
• Start small. It only takes one relationship to start you on the path towards a global future. Develop a strategic partnership with an organization in another market, or find one company willing to try your product or service. Focus on making this relationship work and build out from there.
• Exploit digital channels. In a world increasingly comfortable with ecommerce, digital channels offer emerging companies a gateway to a global customer base. Capitalize on the ability of social media and the web to promote your company—and potentially sell your products and services—to a far wider audience than ever before.
• Don’t ignore other markets’ rules and regulations. Doing business abroad isn’t like doing business in Canada. Legal and regulatory requirements and taxation rules vary from country to country, and it’s important to know what you’re getting into to avoid unexpected surprises down the road. Do your research—even a short meeting with a tax or legal advisor can provide important insights into the risks and issues you might face in doing business in a particular market.