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SMEs eager to invest in new projects, BDC survey says

Companies in Ontario lead the charge, followed closely by BC and the Prairies.

November 27, 2014   by PLANT Staff

MONTREAL — A majority (78%) of Canadian small and medium-sized enterprises (SMEs) intend to invest in new projects within the next 12 months, according to a survey on investment intentions by the Business Development Bank of Canada (BDC).

Ontario leads the country, where 81% of those surveyed said they intend to invest in new projects within the next 12 months, followed closely by BC (79%) and the Prairies (77%).

Entrepreneurs who plan to invest expressed higher intentions in marketing (57%), technology (49%), and in operations optimization (47%). They will likely turn to cash flow, working capital or a line of credit to make these investments.

A larger portion of respondents in the Atlantic provinces and the Prairies plan to invest in technology (65% and 59% respectively). Companies in Ontario are more likely than those in other regions to invest in marketing (68%).

“We’ve seen that they’ve become increasingly more optimistic during the last three years, particularly exporting companies, which are the most definitive about investing in their business,” said Pierre Cléroux, BDC’s chief economist.

Overall, R&D projects are ear-marked to receive the greatest amount of money ($70,000) with over one third of SMEs planning to invest over $100,000.

Meanwhile, a greater proportion of exporters (87%) plan to invest in at least one initiative, such as technology, marketing, R&D or operations optimization, compared with non-exporters (75%).

A significantly larger percentage of exporters also plan to use their working capital (54%) and Scientific Research and Experimental Development (SR&ED) credits (29%) to finance their investment plans. These results stand at 39% and 13% respectively among non-exporters.

“The Canadian economy is doing better because export levels have been on the upswing. It is not at all surprising that survey results show that exporters are significantly more optimistic about their investment intentions,” stated Mr. Cleroux.

Exporters are significantly more likely to invest in R&D (53%) compared with non-exporters (21%), while a larger percentage of exporters plan to focus their marketing investments on developing new markets (60%) and tradeshows (49%). The results for non-exporters are developing new markets (46%) and tradeshows (32%).

More than half of exporters who intend to invest in R&D plan on creating sample products and prototypes. The percentage slides to 35% among non-exporters.

“What is also encouraging is that entrepreneurs across all regions of the country have expressed strong investment intentions,” he added. “From coast to coast, we’re seeing robust numbers; a wave of optimism has swept even traditionally less bullish regions.”


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