Survey highlights

  • Entrepreneurs are proactive in making business investments. Business owners invest to purchase new equipment and machinery, develop new products and services and integrate new information and communication technologies (ICT). These three priorities should continue to heavily influence investment decisions over the next two years.
  • In addition to new products and service development, entrepreneurs plan increased investments in research and development (R&D) and expansion into export markets.
  • Entrepreneurs understand the need to invest strategically. Almost half of business owners invest to improve productivity. A third of them invest to remain competitive while slightly under a third invests to take advantage of a market opportunity or opening.
  • Financial obstacles hinder investment decisions. Entrepreneurs say a lack of working capital and difficulties in securing financing can adversely affect a decision to invest.

The Business Development Bank of Canada (BDC) today released the first results of a survey aimed at understanding entrepreneurs’ experience and intentions with regard to investment, innovation and growth. Conducted by Angus Reid Public Opinion, the survey indicates that entrepreneurs are proactive and strategic when it comes to investing in their businesses. The survey results are being released during Small Business Week®, October 17-23, which celebrates Canadian entrepreneurship.

Of the three main reasons entrepreneurs gave to explain their investments in the past 24 months, 47% wanted to improve productivity, 34% wanted to keep up with the competition and 30% wished to take advantage of an opening in the market.

Planning to invest more in innovation and market expansion

The majority of entrepreneurs intend to invest in new machinery or equipment over the next 24 months (mentioned by 59%). Many entrepreneurs also want to invest in developing new products and services (49%), and integrating ICT (37%).

“The competitiveness of Canadian companies depends in large part on productivity improvements and innovativeness,” said Jean-René Halde, BDC’s President and Chief Executive Officer. “At a time when the economic outlook is gradually improving, it is encouraging to see that our entrepreneurs intend to invest strategically in activities that will help them become more competitive.”

When we compare the investments made by entrepreneurs with those they are planning, we see that they intend to invest more in innovation than they did in the past. In terms of entrepreneurs’ investment intentions, developing new products and services is up nine percentage points and both investing in R&D and expanding in foreign markets are up five points each. A higher percentage of Quebec entrepreneurs (26%) plan to invest to expand in foreign markets, while fewer entrepreneurs in the Atlantic provinces (12%) want to invest in R&D.

Past investments
Over the course of the last 24 months, did your company…
Future investments
Over the course of the next 24 months, does your company plan on…
Purchase new equipment / machinery 67% Purchasing new equipment / machinery 59%
Develop new products / services 40% Developing new products / services 49%
Integrate new ICT 40% Integrating new ICT 37%
Renovate an existing facility 30% Renovating an existing facility 28%
Invest in R&D 18% Investing in R&D 23%
Lease new commercial real estate 14% Leasing new commercial real estate 12%
Expand in foreign markets 11% Expanding in foreign markets 16%
Purchase another company 5% Purchasing another company 6%
Purchase new commercial real estate 4% Purchasing new commercial real estate 7%

Insufficient working capital: a major obstacle to investing

Entrepreneurs interested in investing are hindered by financial obstacles. Having sufficient working capital is an obstacle for 56% of entrepreneurs, while securing the necessary financing is considered an obstacle by 29% of entrepreneurs. Many Quebec entrepreneurs said access to financing is an obstacle to investing (47%). Fewer entrepreneurs in western Canada mentioned it (21%).

Survey methodology

The BDC survey was conducted among the Angus Reid Forum online panel of Canadians, from which entrepreneurs were randomly selected. Canadian business owners with 1 to 499 employees were asked to complete the survey, which was conducted from June 15 to 23 2010. A total of 830 respondents from all provinces and territories completed it (response rate of 33%). The maximum margin of error for a sample size of 830 respondents would be ± 3.4 percentage points at a 95% confidence level. Results were weighted according to region and number of employees in order to be representative of the Canadian SME population.

Detailed survey results are available on BDC’s Small Business Week® website at  www.bdc.ca/en/sbw2010/pages/medias.html .

About BDC

BDC is Canada’s business development bank. From more than 100 business centres across the country, BDC promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs. http://www.bdc.ca/ 

®Small Business Week is a registered trademark of BDC.

For further information:

Geoffrey King
Director, Public Relations, BDC
514 496-4351
[email protected]