CANADA – Thanks to a weakened Canadian dollar and other factors small and medium sized businesses in the country are learning to reap the benefits of the global export market. According to the Royal Bank of Canada (RBC) the time is right for small and medium-sized enterprises (SMEs) to grow their revenues, and support the Canadian economy, by increasing their exports of goods and services abroad. The statement was presented in a new RBC Economics report entitled: Doors open for Canada’s SME exporters. A weak Canadian dollar relative to its American counterpart coupled with low energy prices, and a growing U.S. economy creates conditions that are favorable for SMEs to increase their export presence.
“Over the last decade, a number of factors including the 2008 recession and a strong Canadian dollar led many exporting businesses to shut down or look inward to the domestic market – but the landscape has changed to become more favorable for exporters,” said Gerard Walsh, an economist with RBC. “Considering the upside potential for business and overall economic growth, there is an opportunity for small and mid-sized businesses to think beyond Canadian borders again if they aren’t already.”
SMEs account for 25 percent of Canada’s overall merchandise exports and in several industries, including information and cultural services and a number of manufacturing sectors, their share is over 50 percent. Nevertheless, compared to other advanced economies, the share of overall exports by Canadian SMEs is low, which suggests there is capacity to increase exports amongst these businesses. Canada’s 1.1 million SMEs, defined as businesses with fewer than 500 employees, generate approximately 40 percent of Canada’s GDP, and created two-thirds of net new jobs since the recession.
After peaking a decade ago, the number of SME exporters fell by 15 per cent through 2010 and estimates suggest their numbers have not recovered in the years since. Despite their diminished numbers, SME exporters earn higher average revenues and are more likely to be fast growing than their non-exporting counterparts.
“SME exporters tend to be more optimistic about their future growth and more likely to invest than other SMEs,” said Walsh. “On average, Canada’s small- and mid-sized exporters outspend other SMEs on investments in machinery and equipment, research and development, and new technology.”
“This is a golden opportunity for small businesses who want to accelerate their growth,” said Sarah Adams, vice-president, Small Business, RBC. “The higher revenues earned by SME exporters should inspire other SMEs to grow faster by expanding exports, and market conditions couldn’t make it easier to start now.”
