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Businesses optimistic, but reserved about growth

CIBC survey finds most are not planning to invest in their businesses.


TORONTO — Canadian business owners are optimistic about the future, but most are not thinking about trying to get bigger or tap into new markets and barely a third having expansion plans, and almost 40% are sitting on reserves they aren’t doing much with, finds a CIBC poll.

The bank surmises recent performance isn’t holding up growth plans, noting nearly half of all business owners say their financial success is better now than it was last year.

The survey found 84% are optimistic about the future; 44% rate their financial success as better now than compared to a year ago (up from 32% last year); and 37% plan to expand over the next three years.

More than 60% of business owners noted that if they were planning to expand, the funds would likely come from sources other than banks or loans against their business – mostly from credit cards, their own pocket or borrowing in their name.

Seventy-nine per cent reported having a cash reserve set aside to support their business, Shelley Swanlund, CIBC’s vice-president of business banking and head of small business says this is leading some of them to be more cautious with their expansion plans.

“While many businesses do have cash on hand, most tend to see it as a rainy day fund they can access in the event they have a slower month with their cash flow or have an unforeseen emergency,” she says. “But this effectively leaves these funds on the sidelines rather than supporting the business. As a result, many business owners turn to their personal finances to fund expansion plans, which may limit the capital they have available.”

CIBC observes nearly 80% of businesses are sitting on a cash reserve, but many are not driving much in the way of a return on these funds with 39% of owners saying they are not earning any interest on their cash reserve.

The web survey of 800 owners/C-level managers of businesses (all sizes) conducted from Sept. 15-19 has a margin of error of +/-3.47%, 19 times out of 20.

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