Majority of Canadian SMBs Are Optimistic About Future Growth, but Support Is Still Needed, New Sage Study Finds

  • Canadian small and mid-sized businesses believe access to financing and continued government support are key to achieving growth over the next twelve months

Sage, the leader in accounting, financial, HR and payroll technology for small and mid-sized businesses, released a new global report, Small Business, Big Opportunity? In Canada, the report found that while more than two-thirds (67%) of small and mid-sized businesses (SMBs) are confident that their businesses will be successful 12 months from now, many have struggled to secure financing and government support to stay resilient over the past year.

Sage surveyed over 13,000 SMBs in key markets across North America, EMEA and APAC to understand how SMBs are surviving and thriving despite current public health, economic and societal challenges, including rising costs of living and the ongoing impact of the pandemic. For the past two years, the world has faced a difficult and complex situation, with SMBs being especially impacted.

Of the small percentage of Canadian SMBs who currently do not feel confident about their business (15%), a majority attribute this to reduced consumer spending (41%), inefficiencies exacerbated by the pandemic (39%) and expected lack of government aid and support (20%).

In contrast, the majority of SMBs who expressed business confidence (67%) found that the quality of their staff (35%), increased consumer spending (27%), an increased customer base (45%), and efficiencies adopted during the pandemic (25%) were all factors contributing to their optimism.

“SMBs are the engines of our economy, representing 98% of all businesses across Canada. For Sage, being the trusted network for SMBs during these trying times means ensuring they have the right people, processes, and technology in place to be successful,” said Daniel Oh, Country Manager (interim), Sage Canada. “The challenges of the pandemic have illuminated the need for businesses to be on the path towards digital adoption, removing unnecessary friction and delivering insights that help them run their business more smoothly.”

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Financing the future

During the past 12 months, cashflow and liquidity had a major impact on SMBs’ success and their confidence in the future. The survey found that more than a quarter of Canadian SMBs (27%) cited increased cashflow as the biggest factor for their confidence. Conversely, two in five businesses (39%) claimed that decreased cashflow was the main contributing factor leading to their negative outlook.

Additionally, the volatility of the past year with new COVID-19 variants and continued lockdowns forced many businesses to look at alternative options for financing. The survey found that a majority of Canadian SMBs (60%) sought some form of financial support over the past 12 months. Line of credit/credit cards (19%), government grants (18%) and bank loans (14%) were identified as the top three forms of financial support, while almost one in ten businesses (9%) had to turn to family and friends for financial support during this time.

The survey also revealed that Canadian SMBs continue to see cashflow/liquidity (15%) and limited access to financing (10%) as a major risk to their business over the next 12 months. However, they are more concerned with factors outside of their control that could have a significant impact on their operations. The biggest risks SMBs identified for the next year include continued business interruptions due to COVID-19 (i.e., potential for additional lockdowns, travel restrictions, employees testing positive for the virus) (32%); increases in costs (i.e., inflation, wage increases, rent increases) (32%); and disruptions in the supply chain (20%).

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SMBs turn to the government to help drive growth

In addition to improving cashflow and access to financing, SMBs – regardless of their positive or negative outlook – saw government support and aid as being essential during the past 12 months. Moreover, one in five businesses believe that a lack of government support would have led to a more negative outlook for their business.

When asked whether the government was taking enough action to help SMBs mitigate risks over the past year, 44% agreed with the level of support from the federal government, compared to 39% at the provincial level. Interestingly, 30% of businesses were neutral as to whether the federal or provincial governments were doing enough for SMBs.

However, many SMBs believe that ongoing government support will significantly contribute to the growth and success of their business in the coming year. The survey found that a quarter of SMBs (25%) believe that increased government support – including financial support and policies aimed specifically at helping SMBs – will be essential for their future growth.

“As Canada’s economic driver, SMBs are crucial to helping communities and people thrive. It is vital that partners – in both the public and private sector – work together to empower SMBs in their post-COVID recovery and ensure they have the financial support, technology and resources to experience long-term growth and success,” concluded Oh.

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