BDC survey found 78 per cent of Canadian entrepreneurs at helm of SMEs plan to spend within next 12 months
MONTREAL—A vast majority of Canadian small and medium-sized businesses plans to invest in new projects within the next 12 months, according to a new survey.
Conducted by the Business Development Bank of Canada (BDC), the survey found 78 per cent of Canadian entrepreneurs at the helm of small- to medium-sized enterprises (SMEs) plan to invest in a host of projects, with research and development expected to receive the most investment.
“We survey entrepreneurs’ investment intentions on a regular basis; 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,” BDC chief economist Pierre Cleroux said in a statement.
Overall, R&D projects are ear-marked to receive the greatest amount of money, with an average predicted spend of $70,000, while more than one third of SMEs are planning to invest more than $100,000, according to survey results.
Entrepreneurs who plan to invest expressed higher investment intentions in marketing (57 per cent), technology (49 per cent), and in operations optimization (47 per cent).
BDC said they will likely turn to cash flow, working capital or a line of credit to make these investments.
The survey found a greater proportion of exporters plan to invest in at least one initiative compared with non-exporters, at 87 per cent and 75 per cent, respectively.
More than half of exporters who intend to invest in research and development in the next year plan on creating sample products and prototypes.
This percentage slides to 35 per cent among non-exporters.
Overall, a significantly larger percentage of exporters also plan to use their working capital (54 per cent) and Scientific Research and Experimental Development (SR&ED) credits (29 per cent) to finance their investment plans.
These results stand at 39 per cent and 13 per cent, respectively, among non-exporters.
“The Canadian economy is doing better because since the beginning of the year, 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,” Cleroux said.
Exporters are also significantly more likely to invest in research and development compared with non-exporters, at 53 per cent and 21 per cent, respectively, while a larger portion of exporting firms are also planning their marketing investment around developing new markets (60 per cent) and tradeshows (49 per cent).
About 46 per cent of non-exporters planned to spend on marketing in new markets, while 32 per cent said they plan to spend on tradeshows.
“What is also encouraging is that entrepreneurs across all regions of the country have expressed strong investment intentions,” Cleroux said. “From coast to coast, we’re seeing robust numbers; a wave of optimism has swept even traditionally less bullish regions.”