Small business outlook on the rise in Canada
September 19, 2011
Canada continues to boast a relatively strong economy compared to its western counterparts in Europe and North America. For years now, businesses have been struggling to hire or expand their operations due to a widespread slowdown in sales and revenue.
However, a report released Monday by the Royal Bank of Canada shows a large proportion of Canadian small business owners are planning to invest in their companies in the coming years.
The 2011 RBC Small Business Survey shows new equipment to be the top priority among owners, with 37 percent of respondents citing plans to invest in it. Twenty-nine percent of owners plan to invest in new technology, followed by new products or services (28 percent), new employees (11 percent) and new processes (10 percent).
Overall, two-thirds of small business owners in Canada plan to invest in their own operations. That figure rises to roughly three-quarters in the Atlantic Canadian region.
"Most small business owners are investing in their companies, even in an unsettled economy," said Mike Michell, national director of small business at RBC. "Low interest rates are a driving factor, as well as increased business owner awareness that future growth and competitiveness depend on investments today."
Michell added that nearly 70 percent of business owners are confident that the equity they are building will help them meet their future objectives.
The findings are somewhat comparable to conditions in the U.S. The most recent Small Business Optimism Index from the National Federation of Independent Business showed 36 percent of U.S. small firm owners reported spending on new equipment. Similarly, 11 percent plan to hire in coming months.
However, confidence in the U.S. remains far below that observed among its northern neighbors. Last month, the NFIB Optimism index fell to 88.1 - the lowest reading since July of last year and the sixth straight month of declines.
In Europe, ongoing sovereign debt crises are beginning rack consumer and investor confidence as well. The likelihood of a Greek default and the lack of a viable long-term solution appear unable to uphold a fragile business landscape.
"For entrepreneurs unsure about investing in their company because of economic conditions or other circumstances, speaking with their business advisor can help them weigh their options," Michell advises. "A small business advisor can provide advice to help entrepreneurs build the right financial strategies and take on the challenges of today's changing business environment."