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SMEs are proactive with business investment


October 18, 2010
by PLANT STAFF

MONTREAL: Canadian small and medium-sized enterprises are proactive and strategic when it comes to investing in their businesses, according to a survey conducted in June by Angus Reid Public Opinion for the Business Development Bank of Canada (BDC).

BDC said the results from 830 respondent firms from across Canada (6% of them manufacturers) contrast SMEs’ experience and intentions with investment, innovation and growth over the past two years (from June) and looking ahead two years.

Looking at investments in 2008 and 2009, 47% said they wanted to improve productivity, 34% wanted to keep up with the competition and 30% wished to take advantage of an opening in the market.

There is an 8% gap between the number of respondent that invested in machinery and equipment in the past two years (67%) and those who intend to do so in the next two years (59%). But more intend to develop new products and services (49%) than those who did so in the previous period (40%). Many (37%) will also integrate new information and communication technology compared to 40% who did so over the previous two years.

Having sufficient working capital is an obstacle to investment for 56% of the respondents, while securing the necessary financing was noted by 29%. Quebec businesses had the most trouble accessing financing for investing (47%) but the complaints were fewer among western Canadian SMEs (21%).

Entrepreneurs believe that improving overall productivity and accessing new markets are the best ways to expand a company. Overall, the companies are showing more interest in foreign markets (up 5% to 16%) with Quebec leading at 26%.

The intention to invest in R&D is up. Twenty-three percent will do so over the next two years compared to 18% who invested in the previous 24 months. Fewer SMEs (12%) in the Atlantic provinces want to invest in R&D.

Three-quarters (74%) of respondents consider innovation to be a priority, but only 9% of them have developed and implemented a formal innovation strategy. Forty-percent believe their company’s main competitive advantage is the quality of customer service. They say the primary obstacles to innovation are a lack of funds and time.

Almost half (46%) the companies predict revenues will increase by at least 10% next year, while 22% are aiming for between 10% and 14.9%, another 9% are shooting for between 15% and 19.9% and 15% have set the bar to a high 20% or more.

Click here for full survey results.
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