Canadian small businesses should invest in innovation now, new Scotiabank report
Scotiabank encourages small and medium businesses to invest in innovation and technology as interest rates rise
Scotiabank's latest small business trend report, SMEs: The Shortage Economy sheds light on
In addition to these broad market challenges, the cost of borrowing will rise through 2023, with the
The advice for SMEs to invest in innovation now extends earlier analysis from Scotiabank's most recent Path to Impact Report which found that businesses that invested in their digital capabilities were better positioned to withstand economic challenges.
- SMEs have underperformed larger enterprises in the post-pandemic recovery. Since the start of the pandemic, 1/3 of firms now consider a shortage of input products to be a limiting factor for raising production.
Canadahas seen the number of unfilled job vacancies reach historic levels during the post-pandemic recovery. Many positions remain unfilled from workers who left industries affected by lockdowns, the inability to hire workers as quickly as they were laid off during the pandemic, and overall exodus from some industries where virus exposure was elevated.
- Businesses consider the shortage of labour as an important limiting factor to revenue growth and smaller firms expect to raise wages more on average, compared to larger firms.
- Growth in
Canada'soverall GDP is expected to average 4.3% in 2022 and 3.2% in 2023, with unemployment falling through 2022.
"Taking a proactive approach to investing in your own business - now rather than later - will ensure it's more resilient, as you adapt to a higher cost future and capitalize on changing consumer behaviour," said
As Canadian business owners plan their operational strategies for the year ahead, Scotiabank recommends five key areas for recovery and growth:
- Plan your Liquidity and Cash Flow: Begin scenario planning for 6-12 months ahead, amid rising interest rates and supply chain disruptions. Evaluate your cash flow, employee requirements, inventory, and variable and fixed expenses. Review and consider securing required capital to head off potential rate hikes.
Dive into Digital: Take advantage of the many tools and resources available to help your business grow its digital capabilities. Explore opportunities for your business to incorporate online innovation, and investigate ways to process customer payments faster, such as Scotiabank's
Interac† for business. As your circumstances fluctuate, having agile operating processes can help you adapt quickly with changing conditions.
- Continually monitor the economic environment: Interest rates can rise overnight. It is important that business owners keep a close eye on external factors that can impact their business. This way, risks and opportunities are proactively identified so businesses can pivot and improve their resiliency.
- Lean on your financial A-Team: Now is the time to reach out to your Small Business Advisor. Scotiabank has a vast network of experienced professionals who have supported thousands of businesses throughout challenging periods. Our team offers specialized solutions to help you manage risks, capitalize on new opportunities, and plan for your future – we are here to guide and support you throughout your journey with strategies from recovery to growth.
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To read the full report SMEs: The Shortage Economyreport, please click here.
Scotiabank is a leading bank in the