Entrepreneurs say innovation is important - BDC survey results indicate only
25% think it necessary for business survival; even fewer have implemented a
formal innovation strategy

Survey highlights

• Three-quarters (74%) of Canadian entrepreneurs say innovation is a priority. However, less than one in ten (9%) has developed and implemented a formal innovation strategy. These findings indicate that although innovative intentions are high, innovative action is still low.
• Four in ten entrepreneurs believe their company's main competitive advantage is the quality of customer service. Business owners prioritize service innovation, product innovation and marketing and sales innovation as their three most important innovation activities.
• A lack of funds and a lack of time are the primary obstacles to innovation.

MONTREAL, Oct. 20 /CNW Telbec/ - The Business Development Bank of Canada (BDC) today released further results of a survey aimed at understanding entrepreneurs' experience and intentions with regard to investment, innovation and growth. Conducted by Angus Reid Public Opinion, the survey showed that 74% of Canadian entrepreneurs consider innovation a priority for their businesses. This percentage is higher in western Canada, where 80% of entrepreneurs view innovation as a priority. Survey results are being released during Small Business Week^®, October 17-23, which celebrates Canadian entrepreneurship.

When they describe their innovation strategy, 69% of entrepreneurs say they keep their "ears to the ground" and funnel ideas generated by customers, employees and other sources in their business environment. Less than one in ten entrepreneurs (9%) has developed and implemented a formal innovation strategy and structure.

"Canadian entrepreneurs understand the importance of innovating but they usually do it intuitively," said Jean-René Halde, BDC's President and Chief Executive Officer. "Innovation does not occur by accident, it is a decision. Companies that have an innovation strategy and culture are usually more competitive and better placed to capitalize on business opportunities that arise."

Of those entrepreneurs who did try to innovate, three out of five (60%) think their efforts were successful. Only 11% said their activities were very successful. The same percentage (11%) of survey respondents said the opposite, that their innovation activities were not successful. Western Canadian entrepreneurs were most likely to take a positive view of their innovation efforts (67% rated them as successful).

For the purpose of the survey, innovation was defined as the introduction of something new. It can occur in the way companies are structured, in the products and services they offer and in the way they develop, produce, market and deliver those products and services.

A variety of reasons for innovating
Even though innovation is a priority for a large number of entrepreneurs, the reasons that induce them to take action are quite varied, as indicated in the following table.

Reasons to innovate "What mainly encourages you to innovate?"
I consider it as a necessary part of business survival	25%
A strong desire to improve, to be better	20%
I believe that innovation creates new opportunities	14%
A strong desire to differentiate my business in the marketplace	13%
I always have new ideas and, to me, innovation is part of being an entrepreneur	13%
I believe that innovation helps to increase the growth of my business	11%

A higher percentage of entrepreneurs in the Atlantic provinces wants to innovate because of a strong desire to improve (39%), while a smaller percentage of them (3%) says they always have new ideas to try out.

Customer service seen as the main competitive advantage
For 40% of entrepreneurs, customer service is their company's main competitive advantage. This stands out compared to the other advantages, since 12% of entrepreneurs think their advantage lies in being more innovative, 12% in offering an exclusive product or service and 8% in offering the best product or service. When compared to national averages, more Quebec entrepreneurs say their competitive advantage lies in being more innovative (19%) while fewer entrepreneurs in western Canada say that (8%).

Nearly one third (30%) of entrepreneurs' innovation activities are service-related. Products are the focus of 18% of innovation activities, while marketing and sales account for 16%. There is more emphasis on innovation in marketing and sales in the Atlantic provinces (24%).

Lack of funds and lack of time: obstacles to innovation
More than half (54%) of entrepreneurs think a lack of funds prevents them from innovating. This percentage is smaller among entrepreneurs in the Atlantic provinces (36%) and larger among those in Ontario (61%) and Quebec (58%).

Nearly half (46%) of entrepreneurs also cite a lack of time as an obstacle, although only 21% of entrepreneurs in the Atlantic provinces mentioned this. Small businesses are more affected by a lack of funds and time than large companies.

"Large companies have more resources and it's easier for them to make innovation central to their business strategy," said Jean-René Halde. "At BDC, however, we believe that innovation is within the reach of all entrepreneurs. Innovating doesn't mean looking for the magic bullet, it means finding ways to improve your operations one step at a time."

Survey methodology
The BDC survey was conducted among the Angus Reid Forum online panel of Canadians, from which entrepreneurs were randomly selected. Canadian business owners with 1 to 499 employees were asked to complete the survey, which was conducted from June 15 to 23 2010. A total of 830 respondents from all provinces and territories completed it (response rate of 33%). The maximum margin of error for a sample size of 830 respondents would be ± 3.4 percentage points at a 95% confidence level. Results were weighted according to region and number of employees in order to be representative of the Canadian SME population.

Detailed survey results are available on BDC's Small Business Week^® website at  www.bdc.ca/en/sbw2010/pages/medias.html .

^®Small Business Week is a registered trademark of BDC.

About BDC
BDC is Canada's business development bank. From more than 100 business centres across the country, BDC promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs. www.bdc.ca

For further information:

Geoffrey King
Director, Public Relations, BDC
514 496-4351
[email protected]