Bay Street Bull Magazine: Luxury Business and Lifestyle


Despite economic uncertainty, Canadian SMEs remain confident and poised for success

Written by Christopher Metler

Canadian Small and Medium-sized Enterprises (SMEs) are brushing aside any apprehension of economic and political uncertainty. Instead, they are opting to remain assured in their capacity to innovate, generate revenue and grow their businesses—no matter the macro outlook.

American Express, a trusted advisor to businesses ranging from start-ups to Fortune 500 multinationals, recently released their 2017 Global SME Pulse, a survey that polled senior executives and decision-makers across SMEs in fifteen countries. The Canadian results were encouraging.

SMEs say they are optimistic about the state of the economy over the next twelve months (42 percent positive versus 12 percent negative when asked about the local economy). Despite some challenges, SMEs feel secure and determined in their ability to grow their businesses. In fact, more than half (55 percent) of the Canadian SMEs surveyed expect to see substantial revenue growth of at least four percent over the next 12 months, with 50 percent of SMEs willing to take big risks to gain big rewards.

Finance also continues to exist as a key enabler for SME growth in Canada, but many still struggle to fund the investments they need for continued development. Almost half of Canadian SMEs (48 percent) say they face difficulty accessing the finances they need to grow their business while 53 percent say inadequate cash flow affects their ability to pay suppliers on time.

Paul Roman—Vice President and General Manager of Global Commercial Payments

Paul Roman—Vice President and General Manager of Global Commercial Payments

For Paul Roman—Vice President and General Manager of Global Commercial Payments at American Express Canada—what particularly jumps out about this year’s findings is the extent to which they indicate how much money still matters.

Revenue growth was positioned at number one for 57 percent of Small and Medium-sized Enterprises, with profit margin growth coming second for 51 percent—rendering them by far the most important long-term objectives for SMEs.

“Typically, it's not surprising to see revenue growth and profit margins highly ranked in terms of goals,” Roman makes clear. “But once you peel it back a little bit, you start to see there's a recognition that cash flow is really king, with an even higher percentage of Canadian SMEs - 66 percent – agreeing on its importance to run their business. And cash flow is one of those things that people quite often get a rude reminder of as a small business. So when you see it rank this favourably, it's interesting.”

Canadian SMEs plan to use more unconventional funding sources in 2017, including crowdsourcing (32 percent), flexible access options like credit cards (30 percent), Peer-to-Peer options (30 percent), and supply chain financing (30 percent).

“Businesses looking to unlock working capital often overlook opportunities within their own cash flow,” said Roman. “We’re proactively going to them and saying, 'Here's something that I see coming up in the next quarter that you can leverage in terms of either extending days payable outstanding or accelerating days sales outstanding,’ and fitting that into their overall capital strategy.”

Another area of the survey revealed interesting insights about SMEs and digital technology. Of Canadian SMEs. 63 percent agree that digital technology provides new business opportunities for their companies. Considering an equal number concur that customers are demanding more new or tailored products and services, it’s not difficult to connect the dots here: SMEs are beginning to think in a much more developed way in the small business space.

Not only are tools like digital technology critical for SMEs to get to scale but there's an increasing awareness that they can also be used to finance that growth, and subsequently make administration and support personnel operate in a more systematic fashion.

The mounting realization is one that particularly excites Roman.

“With all of the communication and best practices available in the digital and information world—a lot of it has started to make its way through where you start seeing SMEs actually act in a way you’d expect of a larger, more mature business.”

However, only 18 percent of Canadian SMEs feel confident they were very effective in developing and implementing innovations. It’s that business challenge that 64 percent of SMEs plan to work hardest to address over the next three years. The top three priorities for SMEs when it comes to digital innovation include workforce productivity tools, communications systems and user-friendly and mobile applications.

Despite this, it’s hard to deny the optimism in the responses. Indeed, the future looks bright for Canadian SMEs.