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Ten ways to stay competitive in a tough economy

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Canadian companies operating in the private mid-market will face a number of common obstacles on their road to growth and profitability in the year ahead.

Ernst & Young's 2013 private mid-market outlook points to a struggling global – and, more particularly, U.S. – economy as the root cause of slowed growth and reduced demand in the construction, manufacturing, retail and wholesale industries, among others.

"Success in the face of declining demand begins by looking inward and assessing whether your company has the means, the customer base and the capital to grow," says David Fabian, partner and co-leader of Ernst & Young's Private Mid-Market practice. "If sustainable growth isn't achievable, then companies must assess whether there are opportunities to reduce costs or improve efficiency internally."

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To stay competitive this year, companies should take a critical look at the following areas:

1. Workforce. Review productivity and the benefits generated by teams.

2. Vendor relationships. Measure whether value is being generated by all suppliers.

3. Product line. Confirm gross margins realized are consistent with expectations.

4. Organizational structure. Ensure each legal entity holds the appropriate assets, and that legal exposure is minimized and costs are being managed.

5. Capital structure. Evaluate whether deb-/equity ratios are consistent with risk tolerance.

6. Succession planning. Ensure your company is appropriately structured for the future.

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7. Estate planning. Assess whether estate planning needs are appropriately structured.

8. Global expansion. Consider opportunities to expand abroad.

9. Transaction opportunities. Investigate domestic or international acquisitions.

10. Global reach. Manage remote locations, offices, sales forces in other countries.

"Making the most of opportunities this year will depend on private mid-market companies' ability to objectively evaluate their market position and act accordingly – whether by expanding abroad or exiting the industry," says Mr. Fabian. "Companies can't afford to sit still."

Ernst & Young is a global leader in assurance, tax, transaction and advisory services.

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