Canadian entrepreneurs have entered 2017 with more confidence in their ability to invest in their businesses and higher hopes for increased revenue, according to a new study from the Business Development Bank of Canada (BDC).
Entrepreneurs plan to invest a combined total of $96.6 billion in 2017, 1.6% higher than what was invested in 2016. More than two-thirds (69%) of entrepreneurs say they expect increased revenue in 2017, a significant jump from the 45% of entrepreneurs who said the same for 2016.
“This survey confirms the optimism we’re hearing from our business clients every day,” says Pierre Cléroux, vice president of research and chief economist with BDC, in a statement. “Canadian businesses are ready to invest and they have growth on their minds.”
Two sectors that are showing significantly improved optimism in their business climate are technology and manufacturing. Technology firms are planning on spending an average of $410,000 in planned investments in 2017, a jump of 41% from the amount invested in 2016. The manufacturing sector, on average, will spend $340,000, up 17% over last year.
Areas that are investment priorities for entrepreneurs are related to information technology, training, machinery, equipment and vehicles.
“Our research also confirms technology is playing an increasingly important part in our economy,” says Cléroux. “Greater investment will help Canadian companies get more productive and that’s key for staying competitive in the current business environment.”
Entrepreneurs’ increased positivity in economic conditions is also reflected in the fact that a lack of confidence in the economy is no longer the most cited top obstacle to business investment as it was in 2016. In the current survey, the biggest obstacles to investment are lack of cash flow and lack of qualified personnel.
In terms of how entrepreneurs plan to fund their investments, 67% of businesses say they will use working capital or other internal funds while 23% plan to use a loan or line of credit.
On a regional basis, small and medium-sized enterprises (SME) in Alberta lead the way with the highest increase (17.1%) in planned business investment for 2017, which reflects the stabilization of crude oil prices. SMEs in Ontario come in second with an increase of 2.9% in planned investment while Quebec expects a slight rise of 0.6% and the planned level of business investment in Atlantic Canada will remain the same between 2016 and 2017.
Saskatchewan and Manitoba anticipate a steep decline of 17.5% in business investment, as these two provinces are still hurting from low prices for raw materials. British Columbia and the territories are indicating a drop of 5.4% as “the housing market and the natural resource industries have crippled investment intentions,” the report states.
The data from the survey are based on the responses of 3,988 executives at SMEs across Canada and were collected in August and September of 2016.
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