MONTREAL, June 16 /CNW Telbec/ - Clients of the Business Development Bank
of Canada (BDC) achieve higher revenue growth, higher employment growth and
survive longer than non-BDC clients. These are some of the key findings of a
Statistics Canada economic impact study. The study compared data from BDC
clients to data from similar businesses in the same industries, using study
track groups, or cohorts, of BDC clients by the year they began doing business
with the bank between 2001 and 2005.
For the first time, a study objectively measures the impact that BDC
services has on the development of small and medium-sized businesses. Among
the findings, Statistics Canada concluded that BDC financing clients had up to
26.8% higher revenues for an individual cohort in a given year compared to
non-BDC clients between 2001 and 2005. Clients using both financing and
consulting services fared even better, with up to 59.3% higher revenues than
non-clients in those years.
"This analysis, while done before the recession, demonstrates the
important role BDC plays for entrepreneurs who are managing companies in a
fast-changing economy," said Jérôme Nycz, Vice President, Strategy and
Planning at BDC. "It points to the value BDC creates for entrepreneurs. Even
in the first part of this decade, headwinds included globalized supply chains,
heightened foreign competition and a volatile Canadian dollar."
The Statistics Canada study, commissioned by BDC in 2008, looked at
12,000 BDC financing clients and 2,500 consulting clients and matched their
performance to that of similar non-clients drawn from the agency's database
and Canada Revenue agency tax records. The typical small or medium-sized
business had annual revenues of around $2 million and fewer than 20 employees.
Client confidentiality was maintained at all times. No client identifiers were
provided to BDC by Statistics Canada and vice versa.
The analysis found that revenues increase in the years following the
initial year that BDC clients receive financing, as effects are cumulative.
For example, companies that began using financing services in 2002 experienced
additional revenue growth of 5.1% in the first year, 13.0% in the second year,
21.2% in the third year and 26.8% in the fourth year, compared to non-client
businesses analyzed by Statistics Canada. Positive growth was observed for all
Using the Bank's financing and consulting services together further helps
to bolster revenues. BDC clients that used both services not only outperform
non-BDC clients on the revenue growth front, but they also outperform other
BDC clients that use only one of the Bank's services. For example, the 2001
cohort of BDC clients that used both financing and consulting services had
59.3% higher revenue growth in their fifth year as BDC clients than non-BDC
clients, while BDC clients that used only financing or only consulting
services had 21.0% and 18.9% higher revenues, respectively, than non-BDC
BDC clients had between 4.0% and 11.1% higher employment growth across
all cohorts in each year than non-BDC clients with the exception of the 2001
cohort, where there was no difference in employment growth between BDC and
The data analysis also showed that BDC clients have significantly higher
survival rates than non-BDC clients. For all cohorts, the higher survival rate
of clients compared to non-BDC clients generally increased with time. In other
words, an increasing number of companies that use BDC services remained in
business as they matured.
The analysis found that companies using BDC financing services had lower
profit growth. It is important to note that profit margins were low for both
BDC and non-BDC clients in the years analyzed. Lower profit growth among BDC
clients may actually indicate positive developments for these businesses, as
entrepreneurs may be directing more cash to long-term development because they
perceive BDC to be a committed partner and patient lender.
"Considering that BDC is a key player in the federal government's
response to the recession and credit crunch, the results of this study is
hopeful news for entrepreneurs looking for support in riding out the economic
storm," said Jérôme Nycz. "We will conduct similar analyses in the future to
ensure that BDC's suite of services continues to contribute to the positive
performance of Canadian businesses."
The <a href="http://www.bdc.ca/en/about/SMEResearch/default.htm">Statistics Canada economic impact study</a> is available on BDC's
BDC is Canada's business development bank. From 100 offices across the
country, BDC promotes entrepreneurship by providing highly tailored financing,
venture capital and consulting services to entrepreneurs. Visit www.bdc.ca for
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