FOCUS ON SMALL BUSINESS: Nearly nine in 10 small- and medium-sized businesses feel they are in a better position now than a year ago: KPMG

Most Canadian small- and medium-sized businesses have adjusted their business strategies over the past year in anticipation of a recession and are now feeling more optimistic about their growth ambitions, according to a new KPMG in Canada survey. Although new challenges have emerged, nearly nine in 10 (88 per cent) businesses are confident their company will grow over the next three years, up from 83 per cent in 2022, and noticeably higher than the confidence levels of CEOs of large corporations (80 per cent), it said.

Mary Jo Fedy

The KPMG Private Enterprise™ Business Survey of 700 companies reveals that recession worries mobilized leaders to take proactive steps to make their business more resilient. These wide-ranging efforts have included improving operational efficiencies (37 per cent), cutting business costs/expenses (41 per cent), reducing headcount (26 per cent) and temporarily halting large expenditures (30 per cent).

“Canadian business leaders took decisive action over the past 12 months to prepare for a potential recession by making their businesses smarter, leaner and more efficient,” said Mary Jo Fedy, National Leader, KPMG Private Enterprise. “Although many small- and medium-sized businesses are in a stronger financial position as a result of their actions to withstand a recession that hasn’t materialized, they are now staring down new pressures and interrelated risks. By investing the recent gains they have made into solutions to reduce these threats, they will be on an even more solid footing for future success.”

• 86 per cent of SMB leaders say their company is in a better position today because of the steps they took in anticipation of a recession;
• 82 per cent believe the actions they took to prepare for a possible recession will reap productivity gains, but it could take some time due to inflation (e.g. higher input, labour and financing costs);
• 83 per cent say cost and investment pressures on their operations (e.g. decarbonization, technology, cybersecurity, etc.) are more concerning than a recession;
• Cybersecurity ranks as the number one risk, with 63 per cent reporting their business has been the target of a cyberattack;
• 84 per cent are not finding the talent to match their needs.

“Most companies are now actively recruiting to find people with the right skills to operationalize their technology investments, particularly as emerging technologies disrupt the market,” said Dino Infanti, KPMG Partner and National Leader, Private Enterprise Tax. “With AI now the focus of the digital conversation, leaders are grappling with how best to accelerate its adoption and upskill their workforce to expand and grow. By harnessing transformative technologies like AI, Canadian companies can improve productivity and stay competitive with their U.S. and global peers.”

“Not every company is thriving. For a much smaller proportion of businesses that are struggling to make the necessary adjustments and adapt, this year will be a test of their ability to get back on track. Every business is in a different financial situation and should consider conducting a thorough analysis of their cashflow, operations, tax strategy and climate impacts.”

Mario Toneguzzi

Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)