Entrepreneurs eager to invest in new projects: BDC survey

Survey Highlights

• Over three quarters (78%) of business leaders surveyed plan to invest in new projects within the next 12 months.
• The areas of investment most often selected are marketing (57%), technology (49%) and operations optimization (47%).
• Research and Development (R&D) projects are those to which entrepreneurs plan to dedicate the greatest amount of money, with a median amount of $70,000 mainly financed by the company's cash flow (46%), SR&ED credits (41%) and working capital (38%).

MONTREAL, Nov. 27, 2014 /CNW Telbec/ - A majority—78%─of Canadian small and medium-sized enterprises (SMEs) say they intend to invest in new projects within the next 12 months, according to a survey on investment intentions conducted by the Business Development Bank of Canada (BDC).

"We survey entrepreneurs' investment intentions on a regular basis; we've seen that they've become increasingly more optimistic during the last three years, particularly exporting companies, which are the most definitive about investing in their business," said Pierre Cléroux, Chief Economist, BDC.

Entrepreneurs who plan to invest expressed higher investment intentions in marketing (57%), technology (49%), and in operations optimization (47%). They will likely turn to cash flow, working capital or a line of credit to make these investments.

A larger portion of respondents in the Atlantic provinces and the Prairies plan to invest in technology (65% and 59% respectively). Companies in Ontario are more likely than those in other regions to invest in marketing (68%).

Overall, R&D projects are ear-marked to receive the greatest amount of money ($70,000) with over one third of SMEs planning to invest over $100,000.

Exporters step-up to the plate

A greater proportion of exporters (87%) plan to invest in at least one  initiative (i.e. technology, marketing, R&D or operations optimization) compared with non-exporters (75%).

Overall, a significantly larger percentage of exporters also plan to use their working capital (54%) and Scientific Research and Experimental Development (SR&ED) credits (29%) to finance their investment plans. These results stand at 39% and 13% respectively among non-exporters.

"The Canadian economy is doing better because since the beginning of the year, export levels have been on the upswing. It is not at all surprising that survey results show that exporters are significantly more optimistic about their investment intentions," stated Mr. Cleroux.

Other results are:

• Exporters are significantly more likely to invest in research and development (R&D) (53%) compared with non-exporters (21%).
• A significantly larger percentage of exporters plan to focus their marketing investments on developing new markets (60%) and tradeshows (49%). The results for non-exporters are as follows: developing new markets (46%) and tradeshows (32%).
• More than half of exporters who intend to invest in research and development (53%) in the next year plan on creating sample products and prototypes. This percentage slides to 35% among non-exporters.

Ontario leads the way

"What is also encouraging is that entrepreneurs across all regions of the country have expressed strong investment intentions," he added. "From coast to coast, we're seeing robust numbers; a wave of optimism has swept even traditionally less bullish regions."

Ontario leads the country, where 81% of those surveyed said they intend to invest in new projects within the next 12 months, followed closely by British Columbia (79%) and the Prairies (77%).

Survey methodology

The BDC Research and Market Intelligence group conducted an online survey with the BDC View Points panel, which is comprised of business owners, decision-makers and professionals from across Canada. BDC invited 4,076 panelists to complete the survey, which ran online from August 12­‑25, 2014. A total of 732 respondents, 18% of the panelists, completed the survey. Results were weighted according to region and number of employees in order to be representative of the Canadian business landscape.

About BDC

Canada's business development bank, BDC, puts entrepreneurs first. With almost 2,000 employees and more than 100 business centres across the country, BDC offers loans,  consulting services, growth and business transition capital, securitization, as well as venture capital to more than 30,000 small and medium-sized companies. Their success is vital to Canada's economic prosperity. www.bdc.ca

SOURCE: Business Development Bank of Canada

Maria Constantinescu, BDC Public Relations, [phone], [email protected]