For B.C.’s fastest-growing companies, cash seems to be king.
It’s not just enough to rapidly increase sales; making a profit seems to have become just as important in an uncertain and volatile global economy.
Overall, more than three- quarters of the companies on the list posted a profit in 2011. That’s up from 59% who were profitable in 2007.
For companies in the construction, manufacturing, retail and service sectors, the vast majority of companies remained profitable over the past five years as they rapidly grew their business. Some companies, such as Energold Drilling Corp. (TSX:EGD), have returned to profitability in recent years after suffering a slowdown stemming from the global recession.
But even in traditionally difficult sectors like mining and technology, profit has become less elusive. Nearly two-thirds of the technology companies on the list were profitable last year, compared to only 19% of them in 2007.
Nearly 80% of the mining companies on the list posted a profit, compared with fewer than 50% in 2007.
In the case of mining companies, key projects entering production was a significant contributor to profitability. For technology firms, however, successfully growing market share has been a contributor to a positive bottom line.
Ensuring the financial viability of a fast-growing company has become an increasingly vital concern where financing has become relatively more difficult since the global financial crisis.
While the financial taps seem to be loosening for various technology sectors, some industries, like mining and exploration, face a persistently challenging financing environment (See “Public companies face capital crisis” – BIV issue 1182; June 19-25).
Industry analysts suggest that having a credible business plan and adequate systems in place to facilitate growth will be key components to attracting capital.
Being ready to tap key markets when opportunities arise is an attractive feature for investors eyeing the end of global uncertainty.
