While most countries boast a number of huge organisations employing thousands, it’s SMEs that form the backbone of most economies.
Canadian SMEs is no exception to this. According to official figures 98% of businesses fall into this category and employ a total of around 11 million people. These companies also occupy a very important role in providing employment opportunities to groups under-represented in larger organisations.
To learn more about these small and medium-sized enterprises the payment system PayPal recently commissioned a survey called the 2024 Business of Change Report.
This involved holding in-depth interviews with the representatives of 500 SMEs from across a number of sectors and came up with some very surprising results.
The findings in brief
Given the events and economic conditions of the last few years, 47% of the businesses surveyed said that they had not been able to expand. However, Canadian SMEs are driven by the optimism and enterprise of their owners. So 82% believe that, with the right strategies and support, they will be able to expand in the near future.
63% believe that this growth will be driven by online activity, although 59% feel that the lack of technical expertise available could well hamper their plans.
A number of other factors were cited that would potentially limit their ability to grow and these included the challenging economic climate, pressure from competitors and the fact that consumers and clients are now spending less.
Acquiring new customers was also identified as a potential problem area and almost 25% of businesses reported issues with cashflow management.
Relevantly for PayPal, 19% of businesses said that they found knowing which payment methods to offer difficult to resolve with options including splitting them into instalments, accepting cryptocurrencies or offering the use of digital wallets.
In the case of the latter, many businesses who rely on digital wallets, such as online casinos, have found that PayPal is the safest in Canada. Of the many payment options that most online casinos offer, PayPal is the most common. No doubt this has been chosen for its reliability and security for a sector in which these are vital features.
The cyber threat
Also very pertinent to using a secure payment method has been the increasing risk of cyber crime in Canada. There were 70,000 reported incidents in 2023, a 25% increase since 2022.
Faced with an attack, 46% of the interviewees felt that they couldn’t protect themselves and their customers from falling victim to fraudulent transactions. 43% felt that personal customer information would also be at risk.
Sources of support
The good news for all canadian SMEs is that there are plenty of sources of support out there for them. These range from online guidance and tutorials covering financial planning to official programmes provided by the government.
Recognising the importance of SMEs to the economy, the country’s 2024 budget has included some specific measures to promote growth. These include:
Futurepreneur Canada – there will be a $60 million investment over the next five years in this not-for-profit organisation that aims to give young entrepreneurs access to finance, mentoring and other business services. It’s estimated that by 2029 this will help over 6,000 new businesses to get off the ground and start to expand.
$200 million in investment – due to roll out from 2026 and into 2027 this venture capital will be made available to entrepreneurs who can demonstrate that they’ll put it to good use. The money is especially earmarked for communities who are currently under-served as well as for businesses outside of the country’s key cities and population centres.
Boosting government procurement – it’s been recognised that the government itself is in a good position to directly benefit small and medium-sized enterprises via its procurement needs. So, going forward, bids from canadian SMEs for government contract will be give preferential treatment in order to meet targets set by legislation.
Support for indigenous-owned businesses – although indigenous people comprise 5% of the population, only 1.7% of businesses have majority ownership by this group. To help correct this imbalance, $350 million will be distributed over the next five years to Indigenous Financial Institutions to pass on to qualifying businesses.
Looking to the future
Alongside these encouraging initiatives from the government, there is a sense of optimism among SMEs in general. 61% of interviewees stated that they thought the economic outlook was good in Canada.
Many were also looking beyond national boundaries to expand globally and recognise that offering a wider range of payment methods will make them even more attractive to both international and domestic customers.
70% also agreed that it will be important to invest in technology if they are to achieve their aims.
So the future is definitely bright for those businesses who are prepared to seize all the opportunities available to them.
