CANADA – Higher-than-expected economic growth last year is leading to a jump in planned investments by small and mid-sized enterprises (SMEs), says a new Business Development Bank of Canada (BDC) study.
The study finds SMEs plan to make $140.5 billion in investments this year, a 3 per cent increase over 2017. Most investments are to support ongoing growth and were planned by businesses in the Western provinces and Quebec.
The upswing is due largely to a surge in business acquisition plans, a long-expected trend driven by Canada’s aging population and the retirement of baby boomer entrepreneurs.
Business owners expect to spend 79 per cent more on acquiring other businesses in 2018. This translates to $18.9 billion in investments, up from $10.6 billion in 2017.
“The findings are very encouraging because SME investment is critical to Canada’s economic health,” says Pierre Cléroux, Vice President, Research and Chief Economist at BDC.
“These businesses make up 99.7 per cent of all Canadian companies. When they invest, they become more productive and competitive and can offer higher wages and benefits.”
By region, the brightest investment outlooks are:
- British Columbia and the territories with a 17 per cent increase in planned investments;
- Alberta with a 12 per cent increase in planned investments; and
- Quebec with an 11 per cent increase in planned investments.
Ontario businesses expect to trim investments by 1 per cent in 2018 and other regions anticipate a drop in investments.
Investment plans have shifted to a stronger focus on human capital and less on brick and mortar. Spending on research and development combined with employee training is expected to increase by $2.4 billion in 2018, continuing a ongoing trend.
According to the study, the lack of qualified personnel is the leading obstacle to increased investment. Chronic labour shortages are especially pronounced in rural Quebec and Nova Scotia. Other leading reasons for not investing were shortage of funds and risks.
More than 4,000 Canadian businesses were surveyed for the study, which can be requested from the website.
