Almost Half of Canadian Small Businesses Still In Downturn -- American
Express Small Business Monitor

Budget leaves no room for donations to charitable causes, respondents say

MARKHAM, ON, Dec. 7 /CNW/ - Amidst reports of a strengthening Canadian dollar, new job creation and what's expected to be a solid holiday shopping season, almost half of Canadian small business owners report a downturn in business. The quarterly American Express Small Business Monitor conducted by Angus Reid Public Opinion has found that Canadian small business owners report little to no change from their position a year ago - a contrast to the overall economy, which has recorded gradual GDP growth almost uninterrupted since August 2009. 

The survey found 47 per cent of small business owners across the country report either a "slight" or "significant" downturn to their business, a number that has climbed five points since August and 10 points since May. Correspondingly, those reporting an improvement to their business has fallen eight points during the same period.

In what could be an indication of general market apprehension, small business owners are also more risk averse. Findings indicate just 19 per cent willing to take "significant" or "above average" risks, down from 23 per cent in May and 25 per cent in January.

"In the spring, the Monitor data were suggesting we had turned the corner on the recession and business was starting to improve," said Eric Nielsen, Vice President & General Manager, Small Business Services Canada, American Express Canada. "But today's results show that small business owners are bracing for a recovery period that is slower than previously envisioned."

With a New Year Comes Growth?

Despite the current situation facing small business owners, their outlook is positive. The American Express Small Business Index, which measures and assigns a letter grade to the confidence, performance and attitudes of Canadian small business owners, was unchanged in the latest quarter, at 64 per cent or "C". As well, when asked about the future, three-in-five feel that the economic situation will get better next year, more than two-thirds expect to take on more business next year, and, despite the current situation, four out of five say that the benefits of being a small business owner outweighs the risks, the highest level seen since the Amex SBS Monitor began.

Optimism about their business's financial position improved two points in the latest quarter: 49 per cent said they are hopeful that it will get "a lot" or "a little" better in the future. Optimism is highest in Vancouver at 57 per cent, while Montreal (43%) and Toronto (41%) were both below the national average.

Charitable Organizations to Suffer From Tighter Cash Flows?

A comparison of current findings to those from January shows that small business owners are keeping tight control on their cash flow. Those planning to spend on new equipment or other capital totaled 53 per cent, compared with 57 in January.  Similarly, 19 per cent plan to expand their space, compared with 21 per cent, and the number of small businesses planning to upgrade IT is little changed at 41 per cent versus 42 per cent in January.

Charitable donations were another place that small business owners were controlling cash flow: 40 per cent of respondents said that in the past year they have not given anything to charitable groups or community activities, and among those, almost half (46%) cited budget as the reason.

Despite the constraints on budget, most respondents who support organizations in some way said they do so with money (79%) and services or merchandise (59%), while half reported contributing time. Much less common were small business owners that donated consulting time (21%) or their facilities (15%).

"Recognizing that budgets are tight, small business owners still have lots to offer to organizations they feel a connection to, without excessively straining their cash flow," Nielsen said. "Donating your time, expertise and facilities can make a huge meaningful impact on an organization which itself has limited cash flows."

Few SBOs Connecting Donations to Business Development Priorities

While charitable initiatives undertaken by large enterprises typically have a strategic business component, small business owners tend to think differently. Two-thirds of small business owners said they contributed to charitable initiatives because it's important to give back, while 61 per cent say they believe in the cause — simply put, their motivations are personal. Just a third (35%) cite customer relations as a factor, while 21 per cent cited corporate reputation or branding as a factor.

The Monitor data shows that despite the economy, many small businesses continue to give back to their community. During a time when both groups struggle there may be opportunities for small business owners to do something both personally and professionally meaningful.

Says Al Hatton, President and CEO at United Way of Canada - Centraide Canada:  "We appreciate the entrepreneurial spirit small businesses bring to United Ways-Centraides and the important role they play in local communities, whether it be through volunteering their time or through donations. We continue to reach out and engage small businesses because we realize how important they are to local communities across Canada."

One respondent from Halifax, for example, has for decades offered accounting and bookkeeping services free to local churches and other not-for-profit organizations. In their opinion, it's very important to give back to the community and doing so has positively grown their presence in the business community.

"Marketing and branding often fall low on the list for small business owners, but there's a tremendous opportunity for them to make their time and money work harder," Nielsen said. "Supporting groups that do great work but also serve your core group of customers, for example, can help put your business top of mind, without an additional budget item."

About the American Express Small Business Monitor

From October 29 to November 3, 2010, Angus Reid Public Opinion conducted an online survey on behalf of American Express Small Business Services among a randomly selected, representative sample of 586 Canadian small business owners who currently have two to 100 employees. The margin of error for the total sample is +/- 4.0 per cent, 19 times out of 20. The results have been statistically weighted according to the Statistics Canada Business Register's most current business size and region data to ensure a representative sample of the entire population of small business owners in Canada. Discrepancies in or between totals are due to rounding.

About American Express Small Business Services

American Express Small Business Services (SBS) is dedicated exclusively to the success of small business owners and their companies. SBS supports business owners with exceptional service. With tailored products and services, the team delivers purchasing power, flexibility, control and rewards to help customers run their business. Specifically, business owners can leverage an enhanced set of products, tools, services and savings, including charge and credit cards, robust online account management capabilities and savings on business services from an expanded lineup of partners. To obtain more information about SBS visit www.americanexpress.ca/smallbusiness.

About American Express in Canada

American Express in Canada operates as Amex Bank of Canada and Amex Canada Inc. Both are wholly owned subsidiaries of the New York based American Express Travel Related Services Company, Inc., the largest operating unit of the American Express Company. Amex Bank of Canada is the issuer of American Express Cards in Canada. Amex Canada Inc. operates the Corporate Travel, Travel Services Network and Travellers Cheques divisions in Canada. American Express opened its first offices in Toronto and Hamilton in 1853 and now employs 3,700 Canadians coast-to-coast.

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For further information:

or a full copy of the report, please contact:

Tom Sargent, Edelman, [phone]
[email protected]

Jessica Myers, American Express Canada, [phone]
[email protected]