Small and medium-sized businesses plan to invest $140.5 billion in their companies this year to sustain growth, according to a report from BDC.
The number represents a three percent increase over 2017. This is BDC’s third annual study of SME investment intentions, and the data is based on a survey conducted last August and September by the research firm SOM. In total, 4,019 business owners participated.
The upswing is due largely to a surge in business acquisition plans, a long-expected trend driven by Canada’s aging population and the retirement of baby boomer entrepreneurs. Business owners expect to spend 79 percent more on acquiring other businesses in 2018, or $18.9 billion, up from $10.6 billion in 2017.
“The findings are very encouraging because SME investment is critical to Canada’s economic health,” says Pierre Cléroux, Vice President, Research and Chief Economist at BDC. “These businesses make up 99.7 percent of all Canadian companies. When they invest, they become more productive and competitive and can offer higher wages and benefits.”
British Columbia and the territories (17 percent planned investment increase), Alberta (up 12 percent) and Quebec (up 11 percent) have the brightest investment outlooks, while Ontario businesses expect to trim investments by one percent in 2018 and other regions anticipate steeper drops. As for specific investments, businesses say that spending on R&D and employee training will rise by a total of $2.4 billion this year.
Sustaining growth was the top-cited reason for investing in businesses, followed by boosting the value of the business and keeping pace with the competition. Among sectors, technology (up eight percent) and services (up seven percent) show the highest growth in investment intentions, while manufacturing is flat and a decline is expected in the construction and resources sector (down 14 percent).
Lack of funds generated by the business and risks associated with investment projects are other leading reasons for not investing.
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