70% of entrepreneurs expect increased sales, up from 45% last year: Canadian businesses are ready to invest and they have growth on their minds–BDC
Lack of confidence in the economy is no longer a top barrier to investment, according to the Business Development of Bank of Canada (BDC). Canadian entrepreneurs plan to boost business investment to $96.6 billion in 2017, according to a new study from the bank.
Seventy percent of the entrepreneurs surveyed expect increased business revenue in 2017, a significant jump from the 45% who had the same expectation last year, the bank’s report said. Technology, manufacturers and goods exporters report the strongest growth in investing intentions, the bank said.
“This survey confirms the optimism we’re hearing from our business clients every day,” said Pierre Cléroux, BDC’s Vice President, Research, and Chief Economist. “Entrepreneurs are increasingly confident in the economy, with exporters leading the way in terms of investment intentions. Canadian businesses are ready to invest and they have growth on their minds.”
The bank surveyed almost 4,000 Canadian executives at small and mid-sized enterprises (SMEs) last August and September and found renewed optimism coast to coast, with all provinces and territories showing higher expectations of sales growth than last year.
Business optimism to boost investment resulted from stabilizing crude oil prices
Reflecting the stabilization of crude oil prices, Alberta SMEs lead with a 17.1% jump in planned investments in 2017 versus 2016. Ontario foresees a 2.9% rise in investment intentions, Quebec expects a 0.6% increase, while Atlantic Canada maintains investment at the same level as 2016. British Columbia and the territories anticipate a 5.4% decline in investment intentions and the Prairies forecast a 17.5% drop.
Nation-wide, top investing priorities are growth and productivity projects, led by IT, training, machinery, equipment and vehicles.
“Our research also confirms technology is playing an increasingly important part in our economy. Greater investment will help Canadian companies get more productive and that’s key for staying competitive in the current business environment,” Cléroux says, noting that BDC recently launched a free online productivity benchmarking tool available at bdc.ca.
Technology firms show the most optimism, the study found, with an average of $410,000 in planned investments in 2017, up 41% from the amount they invested in 2016. The manufacturing sector came second, with an average of $340,000 in investment intentions, up 17% over last year.
Top-cited obstacles to investment are lack of cash flow and lack of qualified personnel. Lack of confidence in the economy is no longer a top barrier to investment. Two thirds of businesses intend to finance investments mainly with working capital or other internal funds, while less than one in four plan to use a loan or line of credit, despite favorable credit conditions.
