Entrepreneurial Challenges Survey Results

What are your biggest challenges, concerns and goals in 2006? We asked, you told, and here are the results.

Entrepreneur magazine and PricewaterhouseCoopers' "2006 Entrepreneurial Challenges Survey" is an annual telephone survey of more than 300 CEOs of privately held, U.S.-based businesses recognized for their sustained, rapid growth. They average $31.5 million in annual revenue with an average of 185 employees, and have an ongoing annual growth rate of more than 23 percent.

Here is a complete look at the results.

Who Was Surveyed

  • 340 CEOs of fast-growth, private companies
  • The companies break down as follows: 149 product, 191 service; 159 high-tech, and 181 non-tech
  • The average number of employees at location is 185
  • The average revenue at location is $31.5 million
  • The companies' average 5-year growth is 259 percent

The Outlook
Looking ahead over the next 12 months, here's what our survey respondents expect for the world, the nation and their businesses:

  • 62% are optimistic about the U.S. economy; 29% are uncertain; and 9% are pessimistic
  • 54% are optimistic about the world economy; 36% are uncertain; and 10% are pessimistic
  • The expected rate of growth for the U.S. economy (mean): 3.1%
  • The expected rate of growth for survey respondents' own industry sector (mean): 7.6%
  • 26% is the mean expected revenue growth for survey respondents own company. 95% expect positive growth; 3% expect zero growth; 1% expect negative growth; and 1% didn't report.

Biggest Challenge in 2006
Survey respondents were asked, "What is the single most important challenge that your business will face in the new calendar year?" Here's what they said:

Human Resources

  • Finding and retaining qualified employees: 18%

Demand/Sales

  • Increased sales/revenue; demand: 15%
  • Growth of business: 14%
  • Economy/changing conditions: 10%

Fighting higher costs

  • Increased costs of materials/energy/healthcare: 8%
  • Developing new products and services: 7%

Business expansion

  • New markets/distribution channels/international: 6%

Margins/pricing pressures

  • Margins/profitability; pricing pressures: 6%
  • Competition: 5%

Management

  • Management planning/reorganization/improve team: 4%
  • Legislation/regulations: 4%
  • Capital constraints/raising capital: 3%
  • M&A/acquisitions: 3%
  • New technology/innovation: 2%
  • Customer service/meeting expectations: 1%
  • Higher interest rates: 1%
  • All other mentions (misc.): 9%
  • Not reported: 1%

Wild Card Factors
Respondents were given a list of potential "wild card" factors and asked to rank the three that would be most detrimental to their business and industry in 2006. Here's what they said:

Industry Segments
TotalProductServiceHigh TechNontech
Unstable U.S. economy
Rising healthcare costs
Shortage of qualified workers
Weak market demand
Rising oil/energy costs
Rising interest rates
New government regulations
Weaker capital spending
Weakening world economy
Increased global competition
Decreased access to capital
Sudden drop in U.S. real estate market
Tax increases
Inflation
Other volunteered (misc.)
Not reported
47%
43%
41%
40%
24%
24%
22%
18%
14%
12%
11%
10%
10%
9%
2%
1%
50%
44%
34%
46%
35%
23%
18%
17%
15%
15%
11%
13%
9%
5%
3%
---
46%
42%
47%
35%
15%
24%
25%
18%
12%
9%
10%
8%
12%
11%
1%
1%
49%
42%
42%
45%
18%
22%
21%
23%
15%
16%
13%
6%
6%
7%
2%
---
46%
45%
40%
35%
29%
25%
23%
14%
12%
8%
9%
13%
14%
10%
1%
1%

Wild Card Factors: A Closer Look
What are the key differences by industry in responses to the "wild card" question?

  • Product Sector: More concerned about weak market demand (46%), rising oil/energy costs (35%) and increased global competition (15%).
  • Service Sector: More concerned about shortage of qualified workers (47%) and new government regulations (25%).
  • High-Tech Sector: More concerned about weak market demand (45%), weaker capital spending (23%) and increased global competition (16%).
  • Non-Tech Sector: More concerned about rising oil/energy costs (29%), sudden drop in U.S. real estate market (13%), and tax increases (14%).

Success Factors in 2006
Respondents were given a list of several goals a business might have for the coming year and asked which factors would be most critical to their success in 2006. Here's what they said:

Industry Segments
TotalProductServiceHigh TechNontech
Retention of key workers
Developing new products/services
Expansion to markets inside the U.S.
Increased productivity
Upgrading your technology
Creating business alliances
Better management of cash flow
Expansion to markets outside of U.S
Improving risk management
Finding new financing
Buying another company or launching a spin-off
Preparing your company for sale
Going public
Other volunteered (misc.)
Not reported
73%
38%
36%
35%
28%
23%
21%
14%
13%
11%
11%
7%
2%
1%
1%
69%
40%
31%
39%
28%
26%
24%
15%
16%
13%
8%
9%
1%
1%
1%
77%
37%
40%
32%
27%
20%
18%
13%
11%
10%
14%
5%
2%
2%
1%
74%
47%
39%
30%
26%
27%
16%
21%
9%
15%
11%
9%
2%
---
1%
73%
30%
34%
39%
29%
19%
25%
7%
16%
8%
11%
4%
1%
2%
2%

Success Factors: A Closer Look
What are the key differences by industry in terms of critical success factors?

  • Product Sector: Focused more on increased productivity (39%), creating business alliances (26%), and improving risk management (16%).
  • Service Sector: Focused more on retention of key workers (77%), expansion to markets inside the U.S. (40%), and buying another company or launching a spin-off (14%).
  • High-Tech Sector: Focused more on developing new products/services (47%), creating business alliances (27%), expansion to markets outside of the U.S. (21%), and finding new financing (15%).
  • Non-Tech Sector: Focused more on increased productivity (39%), better management of cash flow (25%), and improving risk management (16%).

Survey interviews were completed in the Q3 of 2005 by independent research firm BSI Global Research Inc. under the direction of PricewaterhouseCoopers.

More details and current findings on a variety of business climate and management issues are available at www.barometersurveys.com. Or with a mobile device, go to wap.barometersurveys.com.

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