Regina Executive Leadership Outlook Quarterly Report November 2016
Table of Contents
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Economic Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Executive Confidence Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Current Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Survey Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Percentage Change in Confidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 An “Entrepreneurial� Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Perception of an Entrepreneurial Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
www.economicdevelopmentregina.com
2
Introduction
Praxis Consulting (Praxis), in partnership with Economic Development Regina (EDR), began a quarterly publication entitled, “Regina Executive Leadership Outlook” in September 2015 that captures the thought leadership of senior business leaders in the Regina region on key issues facing Regina and surrounding areas. Each quarter, Praxis and EDR pick a specific topic as the focus of the publication. Praxis then develops a survey questionnaire to gather quantitative data and an interview questionnaire to gather qualitative data using the chosen topic. The survey is distributed to a list of approximately 60 senior business leaders. The survey has an additional component entitled “The Economic Outlook”. This is a set of static questions asked each quarter that inform a unique Executive Confidence Index. This index is used to measure how confident executives are in Regina’s overall economy across each quarter. Praxis and EDR also request in-person interviews with Regina-based executives to supplement the survey responses. Individuals are selected for an interview when their perspective, industry, or background aligns closely with the survey topic. For the fourth quarterly publication, Praxis and EDR decided the topic was well-suited for a focus group rather than individual interviews. Survey Fieldwork for this project included 50 surveys completed by CEOs and senior executives in Regina’s business community. Survey responses were received via an online survey, delivered to each participant by email. A total of 86 survey invitations were sent; the response rate was 58%. Margins of error cannot be applied to this type of non-probability sample. Focus Group & Interviews The Regina Executive Leadership Outlook focus group was held in the afternoon of October 6, 2016. The focus group was designed to be an informal, fluid discussion related to entrepreneurship in the Regina region.
3
Executive Summary
Regina is nearing the tail-end of the recent economic slowdown. The fourth edition of RELO paints a picture of optimism and provides signals that the recent economic slowdown is shifting. This forward looking positivity aligns with a cultural one that sees a greater recognition of the essential contributions of entrepreneurs. This has been driven, in large part, by our young entrepreneurs. In addition to our senior executives, this edition of RELO is complemented with the input of some of Regina’s leading entrepreneurs. In broad terms, we see ourselves as an entrepreneurial region. We possess most of the essential traits to sustain a vibrant entrepreneurial community, yet to reach our greatest potential, we have work to do. Respondents indicate that a number of crucial assets, including incubation and accelerator support, enhanced mentorship and networking services and more coordinated and effective business services are required. Almost three quarters (72%) think the Greater Regina Area is a community that encourages and enables connectivity between business leaders and entrepreneurs. Because of this, Regina has been described as a “launch pad”, providing a supportive foundation to expand one’s network and a place to nurture an idea into a profitable business venture. In alignment with this sentiment, over 70% of respondents feel we celebrate entrepreneurial success. We are viewing ourselves, our community, and entrepreneurs differently. Young entrepreneurs have significant pride of place, and see themselves not just as potential employees, but also as employers. The optimism held by our young leaders is shared by Regina’s senior executives and business leaders. When asked to assess the economy, the largest group (48.94%) expects their business’ fixed investments to increase over the next 12 months, which is an increase of 5.74% since May 2016. When comparing to one year ago, over 75% indicate their business’ fixed investments have increased or stayed the same. Over half (55.32%) say the number of employees in their business will remain the same over the next year; however, a high level (31.91%) expect to employ more people over the next year, which has significantly increased (by 11.41%) since May 2016. Over half (52.08%) expect sales revenue to increase in the next 12 months. This is up from the May 2016 results where only 38.6% expected their sales revenue to increase. There is a significant increase (from 9.1% in May 2016 to 58% in October 2016) in respondents that think the economy is performing better today than one year ago. RELO has now measured attitudes and expectations across four quarters, a full year, which will provide excellent benchmarks to measure against in the future. The Executive Confidence Index is 2.23, up by 16 points from May 2016, indicating overall optimism. We are seeing a shift following the economic slowdown, there is a feeling of optimism and with careful consideration for building the missing entrepreneurial support infrastructure in our community, we are on our way to realizing the benefits of the Regina Advantage with increased future economic growth.
www.praxis-research-strategy.ca
4
Economic Outlook Executive Confidence Index
The Executive Confidence Index is a single statistic calculated to gauge leadership confidence in future economic prospects. The Executive Confidence Index is a single statistic calculated to gauge leadership confidence in future economic prospects. It is an average taken from questions asking executives to look ahead 12 months. These questions ask executives about the future of Regina’s economy, about their business’ future investments, about their business’ future number of employees, about their business’ future sales revenue and about their business’ future profitability. In each question, a numeric value is assigned to a verbal response. A value of ‘1’ indicates an expected decrease. A value of ‘2’ indicates an expectation of the status quo, while a value of ‘3’ indicates an expected increase. In October 2016, the Executive Confidence Index is 2.23, a positive result above the neutral mid-point. This number represents an increase of 12 points from the last survey conducted in May 2016. Note that the Executive Confidence Index has returned back to where it was in September 2015.
5
Current Conditions A calculation similar to the Executive Confidence Index will tell us how executives feel about today’s economic conditions compared to one year ago. In October 2016, executives rate the current economic condition of their business, compared to one year ago, at 2.01, just over the neutral mark and 16 points higher than in May 2016.
6
Survey Highlights Executive Confidence Index is 2.23, up by 16 points from the previous quarter results. The confidence index indicates overall optimism with a significant increase from 5 months ago. There is a significant increase from 9.1% in May 2016 to 58% in respondents that think the economy is performing better today than one year ago. Fewer think the economy has performed worse or has stayed the same than May 2016. Compared to May 2016, there is a 5% increase in respondents that expect the economy to perform better. 68% expect Regina’s regional economy to perform at about the same level over the next 12 months, this percentage decreased from three quarters (75%) in May 2016. The largest group (48.94%) expect their business’ fixed investments to increase over the next 12 months. The number of respondents that expect their investments to increase over the next 12 months has increased by 5.74% from May 2016. Compared to one year ago, 48.94% indicate their business’ fixed investments have increased. This is up 12.54% since May 2016. 27.66% say they have stayed the same. 23.4% say they have decreased. Over half (55.32%) say the number of employees in their business will remain the same over the next year; however, 31.91% expect to employ more people over the next year, which has significantly increased (by 11.41%) since May 2016. 12.77% expect to employ fewer people over the next 12 months. Even though May 2016 results indicated the largest group (63.6%) expected to employ the same number of employees over the next year, this quarter’s results indicate the largest group (44.9%) currently employ more employees than they did a year ago. Over half (52.08%) expect sales revenue to increase in the next 12 months. This is up from the May 2016 results where only 38.6% expected their sales revenue to increase over the next year. In May 2016, over half (54.5%) said the sales revenue of their business had decreased over the last 12 months. This quarter, over half (53.19%) said the sales revenue had increased over the last 12 months. While the largest group (47.92%) expects their business profitability to remain the same over the next year, 37.5% expects their profitability to increase. Only 14.58% expect a decrease, which is down significantly from May 2016 when 27.3% expected a decrease. Looking back over the past year, an equal number of respondents (36.17%) say their business profitability has stayed the same or decreased. 27.66% say their profitability has increased, which is up significantly (11.76%) since May 2016 when only 15.9% said their profitability had increased in the past year.
7
Percentage Change in Confidence Tables 1 - 4 demonstrates the percentage change in responses since May 2016. There is an increase in the level of optimism from May 2016 to October 2016 when looking back on the last year and looking ahead 12 months.
Table 1 - Difference in responses regarding investments from last quarterly report (May 2016). Reported in percentages.
Table 3 – Difference in responses regarding sales revenue from last quarterly report (May 2016). Reported in percentages. In the next 12 months, will your SALES REVENUE ...
In the next 12 months, will your INVESTMENTS ...
May’16
Oct’16
% Change
Decrease
15.9
10.64
(33.1)
Stay the same
40.9
48.94
19.7
43.2
40.43
(6.4)
Increase
% Change
Decrease
13.6
12.77
(6.1)
Stay the same
63.6
55.32
(13.0)
20.5
31.91
55.7
Increase
% Change
Decrease
29.5
14.58
(50.6)
Stay the same
31.8
33.33
4.81
38.6
52.08
34.9
Table 4 – Difference in responses regarding profitability from last quarterly report (May 2016). Reported in percentages.
In the next 12 months, will you EMPLOY...
Oct’16
Oct’16
Increase
Table 2 – Difference in responses regarding employment from last quarterly report (May 2016). Reported in percentages.
May’16
May’16
In the next 12 months, will your PROFITABILITY ...
May’16
Oct’16
% Change
Decrease
27.3
14.58
(46.6)
Stay the same
45.5
47.92
5.3
25.0
37.5
50.0
Increase
8
An “Entrepreneurial� Region There are a number of required factors that have been proven to work collectively to contribute to a strong and vibrant entrepreneurial support system. This survey will ask you a series of questions that ask you to consider the following factors in an entrepreneurial ecosystem in the context of the Regina region.
9
Perception of an Entrepreneurial Region Survey Question: In your opinion, do you think that existing legislation and regulations are favourable to entrepreneurs entering or operating in the Regina region? There is a general belief that existing legislation and regulations are favourable to entrepreneurs entering or operating in the Regina region. Asked to respond on a 1 – 5 scale, 50% responded neutral, and 28% responded positively.
“It’s the Silicon Valley of the prairies; the incubator that will just blow up and all the major investors [will be] coming here because housing will be cheap [and] it is going to be cheap to operate here. We have the most sunshine, most wind per capita. We will be the centre for the nation technologywise.”
Survey Question: In your opinion, to what extent do you think that support exists in the area of human capital for the Regina region (e.g., post-secondary institutions, job fairs, employment support programs, etc.)? There is a high indication (48%) that support exists in the area of human capital for entrepreneurs in the Regina region. Only 12% say support does not exist in this area.
– Focus Group Participant
10
Survey Question: In your opinion, do you think of the Regina region as a community that encourages and enables connectivity between business leaders and entrepreneurs? Over half (72%) think the Regina region is a community that encourages and enables connectivity between business leaders and entrepreneurs. 32% of these responded neutral, where only 28% say little to no encouragement exists.
“The landscape has changed here, there is a ‘support local’ movement, but also a need to support each other.” – Focus Group Participant
Survey Question: Please rank your answer between 1 and 5; where 1 means no success is celebrated and 5 means all success is celebrated. A similar number (72%) think the Regina region is a community that celebrates the success of entrepreneurs. 36% of these responded neutral, where only 28% say little to no success is celebrated.
11
Survey Question: In your opinion, to what extent do you think that support exists for entrepreneurs in the area of support services (e.g., access to technical experts and mentors, incubators, business start-up, and planning services, training, etc.)? The largest group (44%) say very little support exists for entrepreneurs in the area of support services (e.g., access to technical experts and mentors, incubators, business start-up, and planning services, training, etc.) within the Regina region. However, 54% responded neutral (28%) or say some support exists (26%), supporting the notion that some support does exist for entrepreneurs in the area of support services.
“Everyone is your neighbour, this contributes to our DNA of an entrepreneurial city.” – Focus Group Participant
Survey Question: In your opinion, to what extent do you think that support exists for entrepreneurs in the area of financing (e.g., lending institutions, venture capital / private equity / angel investors / seed funding, foundations, grants, government, etc.)? The largest group (40.82%) remained neutral when asked if support exists for entrepreneurs in the Regina region in the area of financing. The majority of the remaining respondents (36.73%) indicated little to no support exists in this area.
12
Survey Question: In your opinion please rank Regina and region as being ‘entrepreneurial-friendly’ on a scale between 1 and 5; where 1 means not at all entrepreneurial-friendly and 5 means very entrepreneurial-friendly? The largest group (44.9%) of respondents remained neutral when asked if the Regina region is ‘entrepreneurial-friendly’. The majority of remaining respondents (32.65%) were positive, reflecting the region as generally ‘entrepreneurial-friendly’.
“There is a business and entrepreneurship culture growing in Regina, it is not just a government town anymore.” – Focus Group Participant Survey Question: Using the scale below, please indicate to what extent you believe Regina regards new entrepreneur business as a threat to the local business environment or an opportunity for growth? 55.1% say Regina regards new entrepreneur business as being more of an opportunity for growth than a threat to existing business.
13
Survey Question: In your opinion, what should be the priorities when it comes to supporting entrepreneurs in Regina? Asked to rank seven factors in order of priority for the Regina region with regards to assisting entrepreneurs, the top three priorities are: 1. Access to capital/funding; 2. Accessible/cost effective business planning support; and, 3. Single point access to business set-up support and services. Of least importance is co-working space.
14
Conclusion
This edition of RELO portrays an image of optimism and signals that the recent economic slowdown is shifting. Business leaders expect to see investments, sales, and employees increase over the next twelve months. While our region does see itself now as entrepreneurial there is work to do within the business community to help grow our entrepreneurial supports. Diversity exists within the community, which is a great point to start. 72% think the Greater Regina Are is a community that celebrates successes of entrepreneurs, and encourages and enables connectivity between business leaders and entrepreneurs. With continued direction and support entrepreneurs will see more opportunities to grow. Between an improved CEO Confidence Index, a strong sense of entrepreneurial culture, and a willingness to work together to improve our business environment, we are seeing a shift in the economic slowdown. This continued optimism and support will see the Regina Advantage flourish.
15
About EDR Economic Development Regina Inc. (EDR) is the economic development agency for the City of Regina and region. EDR provides leadership to the community to support industry growth and diversification through retention and expansion of existing business and encouraging investment, development of industry and tourism with focus on the key-growth sectors of the economy in the Region. In collaboration with key stakeholders, we work to identify, develop and promote opportunities that advance economic prosperity for those who live, work, learn, visit and invest in the Regina region and ensure the Regina region offers a vibrant and diversified economy for investors, is a positive destination experience for visitors and offers a high quality of life for residents. David Froh, VP Sector Development E:dfroh@economicdevelopmentregina.com P:306-789-5099 ext 230
About Praxis Praxis consulting is Saskatchewan’s largest locally-based management consulting firm. Praxis works collaboratively with clients in the facilitation of growth and excellence, leveraging an unmatched wealth of experience across multiple sectors. Praxis strives to: •
Inform clients with market research and economic impact studies, providing relevant insights into various sectors and communities.
•
Strategize, developing custom solutions tailored to clients’ most unique and complex needs.
•
Execute strategic plans, portfolios and projects by facilitating internal project management, change management and communication capacity.
Val Sluth, Managing Principal E: info@praxis-research-strategy.ca P: 306-545-3755