KPMG survey finds that most are planning to increase their headcount and there's a generally optimistic tone for the economy
Despite a concern about economic slowdown, Canada’s small and medium sized businesses are feeling resilient.
A newly-published survey from KPMG reveals optimism among the backbone of the Canadian economy with 83% of SMB leaders saying that they are confident in their company’s growth in the next three years.
Almost eight in ten see a healthy outlook for the Canadian economy and a similar share say that they are feeling confident in their industry or sector.
But the fear of recession is still real to the point that 61% of respondents have already taken action to make their business recession-proof including boosting productivity, identifying operational inefficiencies and unnecessary complexities, and managing costs by increasing price.
Most of the leaders said that they expect any recession to be relatively mild and short-lived.
“Canada’s small- and medium-sized businesses deserve full marks for responding effectively to more than two years of economic volatility and disruption,” says Mary Jo Fedy, national leader, KPMG Enterprise. “The current economic turbulence is another test of their resilience as most SMB leaders prepare now to set up their businesses to weather the coming storm. Many are drawing on their recent experiences and have ambitious plans to grow rapidly as the economy rebounds.”
The survey is part of KPMG’s Global CEO Outlook.
Capital investments pause
Focusing on mitigating a downturn means that many SMB leaders have paused capital investments such as digital transformation, with most describing their current digital investment strategy as ‘aggressive’.
Most of the respondents acknowledge that this pause on investment should be a short-term measure as lagging on going digital may lose them their competitive edge.
“while pausing capital investments in digital can be a good strategy to wait out economic concerns, this response shouldn’t apply to investing in the digital skills and acumen of your people,” added Fedy. “A slowdown provides an opportunity to better align talent and technology after the rapid changes made over the last two years. Investing in training and upskilling your workforce on new technological advancements can achieve even greater efficiencies and better business solutions.”
Risk outlook
The biggest risks to Canadian SMBs’ growth, as identified by the poll, include rising interest rates and inflation, heightened cybersecurity threats and intense competition for the top talent with two-thirds having a difficult time hiring people with the skillsets they need to grow their business.
Dino Infanti, partner and national leader on enterprise tax at KPMG in Canada, says that businesses should use a measured approach in navigating near-term economic pain.
“It’s important keep a close eye on cash flow and future-proof your business but continue with the core strategies and investments that have been most critical to achieving growth. While a prolonged recession would have a more adverse effect on SMBs, an overreaction could extend it even further.”
