At a glance
- Building business value should be an ongoing discipline, not a reaction to disruption.
- Acting while conditions are manageable creates more strategic options later.
- Small operational and financial pressures compound if left unchecked, leading to risks like declining profitability and missed opportunities.
- Disciplined decisions around costs, capital, and operations strengthen resilience.
- Continuous value creation helps position your business for sustainable growth.
Operating through economic uncertainty or slower growth is a natural part of doing business. But the steps leaders take while conditions are measured and manageable can determine how well they navigate what comes next.
With Canada’s economy continuing to face ongoing uncertainty and disruption, now is the time to identify where pressure may be building and protect value.
What is the current economic environment in Canada?
The Bank of Canada’s recent decision to hold rates points to a steady, but still cautious, business environment at the moment. Ongoing economic threats and potential disruptions continue to present challenges. While the central bank noted the economy could see a rebound ahead after a difficult start to the year, external forces including geopolitics and tariffs continue to create instability.
Uncertainty remains the operating reality as leaders continue to navigate elevated cost pressures, inflationary risk, the ripple effects of geopolitical conflict, and shifting trade dynamics. As these pressures continue to evolve, businesses should continue to plan their next moves carefully.
Our survey of 520 Canadian business leaders revealed three distinct sentiment patterns, reflecting how they’re interpreting and responding to the economic landscape:
The common thread is disciplined action: businesses are selective about where they protect, reduce, and invest to preserve business value.
A proactive approach can help you make clearer decisions about where to adjust operations before risk mitigation becomes the only option.
How proactive value creation can protect business performance
Operational and financial pressures can emerge at any time, but are exacerbated during a downturn or times of uncertainty. Shifts in customer demand, rising input costs, supply chain disruption, margin compression, or changes in financing conditions can create pressure before broader economic weakness takes hold across the economy. An ongoing and durable focus on value creation can mitigate these risks and position businesses to work through challenges and thrive.
When challenge and uncertainty are on the horizon, start by understanding where costs, demand, cash flow, and margins are beginning to move out of line. From there, you can determine whether your business needs to adapt to market changes, execute a defensive strategy, or develop a performance improvement plan.
Managing costs in the short or long term can be achieved in a variety of ways, including through finding alternative suppliers, reformulating how the business delivers a service or manufactures a product, or potentially conducting an 80/20 analysis.
An 80/20 analysis can help you identify which customers and products/services are driving the most profitability and bring the most value to your business. Protecting core customer relationships, even at the expense of short-term margins, can help preserve value when demand is uneven.
Failing to take proactive steps can erode business value over time, allowing small pressures to compound into more significant risks, including:
- Declining profitability
- Loss of stakeholder confidence
- Reduced access to capital
- Potential insolvency
- Cash flow constraints
- Difficulty servicing loans
- Missed strategic opportunities
- Being unprepared for future disruptions
How can businesses protect and create value?
There are many strategies businesses can implement to preserve and create value.
Some of the steps include:
- Improving transparency in financial performance and streamlining operational processes for greater efficiency.
- Building resilience into their cost structures.
- Identifying underperforming assets.
- Reassessing strategic priorities.
- Making disciplined decisions regarding capital allocation.
- Preparing contingency plans to scale down, pause, or reallocate resources if results deteriorate.
When market conditions are measured but uncertain, companies have an opportunity to act and innovate before pressure intensifies.
You can do this by performing an operational and strategic review of the business, especially before it becomes too stressed.
“Several companies are using this moment as a chance to spur further change and innovation, including exploring targeted uses of automation and AI to redesign workflows, improve cost visibility, strengthen controls, and support more disciplined decision-making,” he adds.
The goal is not to invest for the sake of transformation, but to focus capital on changes that can improve productivity, strengthen margins, and ultimately lay the foundation to operate effectively through any economic environment.
Doing so can help provide a springboard for the next stage of renewal and growth of your business. And having a clear game plan with contingency options is essential for navigating financial challenges successfully.
How BDO can help you protect and create business value
Our Strategy, Value Creation & Analytics team works with businesses to assess performance, identify value preservation opportunities, develop or revitalize their growth plan, undertake and integrate acquisitions, or arrange for a possible sale. We bring an owner’s mindset and use a hands-on approach to uncover areas for improvement and execute strategies to help you achieve your goals.