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Small Business Owners are Investing for Future Growth: RBC Poll

Two out of three plan to make investments in their business over next two years

TORONTO, September 19, 2011 — Despite ongoing economic uncertainty, two out of three (66 per cent) Canadian business owners are planning on investing in the their company over the next two years, according to the 2011 RBC Small Business Survey, conducted by Ipsos Reid. This investment will be in areas such as new equipment (37 per cent), new technology (29 per cent), new products and services (28 per cent), new employees (11 per cent) and new processes (10 per cent).

"Most small business owners are investing in their companies, even in an unsettled economy," said Mike Michell, national director, Small Business, RBC. "Low interest rates are a driving factor, as well as increased business owner awareness that future growth and competitiveness depend on investments today. In fact, seven-in-ten business owners (69 per cent) are confident that the equity they are building in their company will help them meet their future goals."

One-in-three small business owners (34 per cent) did not invest over the past two years in the areas of technology, new equipment, new products/services and human resources. Their main reasons for not doing so were:

  • economic uncertainty (37 per cent),
  • no need to invest in these areas (32 per cent), and
  • a lack of capital funding (11 per cent).

"For entrepreneurs unsure about investing in their company because of economic conditions or other circumstances, speaking with their business advisor can help them weigh their options," adds Michell. "A small business advisor can provide advice to help entrepreneurs build the right financial strategies and take on the challenges of today's changing business environment."

Highlights from across Canada

In almost every province, nearly two-in-three (66 per cent) small business owners plan to invest in their own companies. The exception is Atlantic Canada, where nearly three-in-four (72 per cent) small business owners plan to do so. There are some notable differences, particularly in the different areas of investment.

British Columbia

  • On par with the national average, two out of three (66 per cent) business owners in British Columbia plan on investing in their company over the next two years.
  • B.C. entrepreneurs will focus their investments on new equipment (39 per cent), new products and services (28 per cent), new technology (23 per cent), new processes (12 per cent) and new employees (10 per cent).

Alberta

  • Two out of three (64 per cent) business owners in Alberta are planning on investing in their company over the next two years.
  • New equipment will be the main area of investment for Alberta entrepreneurs (40 per cent). Additional investments will be in new products and services (27 per cent), new technology (21 per cent), new processes (11 per cent) and new employees (seven per cent).

Manitoba and Saskatchewan

  • Small business owners in Manitoba and Saskatchewan are least likely to invest in their company over the next two years (63 per cent),
  • Prairie entrepreneurs lead the country when it comes to investing in new equipment (41 per cent), but have the lowest percentage (six per cent) of entrepreneurs with plans for new employees. Other investments include: new technology (31 per cent), new products and services (28 per cent), new processes (nine per cent).

Ontario

  • Two out of three (67 per cent) business owners in Ontario are planning on investing in their company over the next two years.
  • Investment will be in areas such as new equipment (33 per cent), new technology (34 per cent), new products and services (28 per cent), new processes (11 per cent) and new employees (nine per cent).

Quebec

  • Two out of three (67 per cent) business owners in Quebec are planning on investing in their company over the next two years.
  • The focus for Quebec's entrepreneurs will be mostly on new equipment (40 per cent), but other areas of investments include new products and services (29 per cent), new technology (20 per cent), new employees (18 per cent) and new processes (eight per cent).

Atlantic Canada

  • Atlantic Canadian entrepreneurs lead the country when it comes to plans for investing, as nearly three-in-four (72 per cent) plan on investing in their company over the next two years.
  • They also have the highest percentage of entrepreneurs planning to invest in new technology (38 per cent) and new products and services (30 per cent). Other areas include new equipment (35 per cent), new employees (17 per cent) and new processes (12 per cent).

Top Three Tips for Investing in Your Business:

  1. Invest in yourself - and ask others to do so as well - Use your own savings and investments, find potential investors (including family) to buy share of your business or reinvest the profits back into your company. This is not only the least expensive option to build equity, but making a strong personal investment in your business can make it easier to secure future financing from a bank or other lenders.
  2. Secure short-term financing - An operating line is ideal for those starting a business, or for seasonal businesses with a fluctuating cash flow. Typically, it takes one year to pay back, so it's useful for immediate needs, like supplies, inventory and payroll.
  3. Arrange long-term financing - A term loan or leasing is ideal for big-ticket items, like vehicles, or office renovations, and has a longer repayment term - usually of one to five years.

These are some of the findings of an RBC /Ipsos Reid survey conducted from July 29 to August 8. This online survey of 1,400 entrepreneurs, who were either self-employed or owned their own small business, was conducted via the Ipsos I-Say Online Panel, Ipsos Reid's national online panel. The results are based on a sample where quota sampling and weighting are employed to balance demographics and ensure that the sample's composition reflects that of the actual Canadian population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. An unweighted, probability sample of this size, with 100 per cent response rate would have an estimated margin of error of ±3 per cent, 19 times out of 20.

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For information:

Margie McNeil, RBC Corporate Communications, 905 606-1425,
margie.mcneil@rbc.com

Angela Gordon, RBC Corporate Communications, 905 816-5650,
angela.gordon@rbc.com