Canadian businesses are optimistic about growth in 2024. Here’s why

Tech adoption and talent access fuels a brighter business forecast for the coming year.

Recent reports have outlined a grim scenario for Canadian small to medium-sized businesses (SMBs). Higher interest rates, rampant inflation, looming recession fears, and geopolitical turmoil are all contributing to a seemingly bleak outlook for the year ahead.

However, research conducted by Zoho Canada over the last year offers a different perspective. These reports, which surveyed thousands of small business owners in Canada across a variety of industries, reveal a wave of optimism among Canadian SMBs, with last year’s survey finding that nearly 75 percent expect to grow by one to 20 percent in the next year.

“How many new businesses came up in the last three years? Probably not many, but at the same time, not many disappeared either.”

For Chandrashekar Lalapet Srinivas Prasanna (LSP), managing director of Zoho Canada, these results speak to a more resilient generation of businesses. “Despite the turbulent times, companies seem to have adapted extremely well to deal with these challenges,” LSP said.

LSP sat down with BetaKit in a recent interview to discuss what is driving this optimism, and how SMBs can continue to stay resilient amid ongoing macroeconomic hurdles in 2024.

Tech adoption has helped businesses stay resilient

As the pandemic swept across the globe in 2020, Canadian businesses were compelled to rapidly pivot to a new operational paradigm.

Tech fuelled this shift, with research from McKinsey finding that in a mere few months, the pandemic accelerated business’ digital transformations by three to four years. “What other choices did small businesses have?” LSP said. “Either go bust, or have some discipline which allows them to thrive.”

Zoho Canada found the impact of these digital transformations has been significant: half of respondents indicated that their digital transformations were a success and improved profitability. LSP noted the pandemic “forced everybody to adopt technology or risk becoming obsolete.”

From collaboration platforms enabling remote and hybrid work environments, to artificial intelligence systems automating routine tasks, and business intelligence and CRM tools offering deeper insights into operations and customer relationships, Zoho’s data found that SMBs are continuing to focus on technology adoption long after the pandemic.

LSP said Zoho, which offers a software suite to help businesses run more efficiently, has seen usage of its products skyrocket in the last four years. “That is enough indication to say that this has been a success,” he added.

Talent is ripe for the picking

In the last year, widespread layoffs swept over Canada’s technology industry, with numerous firms executing multiple rounds of staffing reductions in efforts to navigate through the economic downturn.

Despite the challenges, recent indicators suggest a shift away from the contraction experienced over nearly two years. Zoho Canada’s data reveals companies are refocusing on expansion: 30 percent of Canadian SMBs are planning to recruit new employees, 64 percent anticipate maintaining their current workforce levels, and fewer than 10 percent expect to reduce their staff.

And for SMBs looking to add to their teams, LSP said the recent flood of layoffs has tipped the scales in the war for talent, creating new opportunities for SMBs looking to grow their teams. “What I’m seeing is an enormous amount of talent that’s back in the pool seeking jobs,” he added.

But the way we work now is vastly different compared to a few years ago, which means SMBs are also prioritizing talent retention. Zoho Canada found that more than three-quarters of respondents implemented measures, such as raises, more benefits, flex vacation, and hybrid work, to retain staff within the past 12 months.

While employees have overwhelmingly expressed a preference for remote work—Zoho Canada found that 60 percent of respondents feel more productive when working remotely— LSP noted that transitioning to a fully remote model poses distinct challenges for growing teams.

“It’s extremely hard for someone to understand what the culture of the organization is and [engage in] the learning that happens through osmosis,” he added.

Starting up is still worth the effort

The 2024 outlook for SMBs, while positive, still brings some apprehension. Zoho Canada’s surveys highlight that cash flow and the economy remain prime concerns for these businesses. More than 50 percent of respondents believe they’ll need to do more with less in 2024, and 64 percent of respondents indicate it’s harder now to start a business than it was five years ago. 

Still, close to 70 percent of Zoho Canada’s survey respondents would encourage others to try their hand at entrepreneurship, suggesting that the challenges of starting and running a business aren’t necessarily a deterrent. 

“How many new businesses came up in the last three years? Probably not many, but at the same time, not many disappeared either,” LSP added.

That doesn’t mean the road isn’t going to get tougher. LSP said the global economy is still an “earthquake zone,” and for that reason, “There is no silver bullet here. It’s just wait and watch.”

He stressed that in order for SMBs to navigate potentially rougher weather ahead, the focus for leaders should be on building resilience into the organization, which means keeping a close eye on cash flows, staying flexible, and being willing to embrace innovation. 

“These reports actually indicate that Canadian businesses are doing it. It is just that they have to hunker down even more, which is hard,” LSP said.

“Technology is not just a tool, it is an enabler of progress. It empowers your people and yourself to achieve the fullest potential possible, ideally leading to success in an ever-evolving business landscape. I think this is something that our businesses have taken seriously, and I think they’ll continue to do so.”

Brought to you by Zoho Canada.

Check out Zoho Workplace to learn about the latest tools that small businesses across Canada are adopting to optimize their operations.

Isabelle Kirkwood

Isabelle Kirkwood

Isabelle is a Vancouver-based writer with 5+ years of experience in communications and journalism and a lifelong passion for telling stories. For over two years, she has reported on all sides of the Canadian startup ecosystem, from landmark venture deals to public policy, telling the stories of the founders putting Canadian tech on the map.

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