Canadian small and medium-sized businesses are aiming for strong growth over the next three years, although a possible economic slowdown remains a short-term concern, according to a survey by KPMG.
The survey of 503 SMEs reveals that 83% of them feel optimistic about their growth over the next few years and that 82% say that their industry inspires them with confidence. Optimism comes from companies in the consumer and retail sector, manufacturers, and the real estate and construction industries.
According to the survey, nearly a quarter of SMEs cited internal growth as the most important strategy for achieving their overall growth goals, with digital and technology investments ranking second at 18%.
Dino Infanti, tax partner at KPMG in Canada, said the sense of optimism in the SME community stems from resilience to the pandemic, lessons learned from different experiences and expectations that a possible recession could be short-lived, although it might cause some problems. The survey indicates that 61% of SMEs have taken preventative measures to mitigate what they see as short-term risks, ranging from a short-term hiring freeze to temporarily halting digital transformation plans .
At this point, 30% of small and medium-sized businesses have a hiring freeze in place, according to the survey, and 4 in 10 plan to do so within the next six months. Meanwhile, 60% of respondents said they have suspended or plan to suspend their digital transformation plans over the next six months in the event of an economic downturn.
“In a downturn, companies with a clean house, managing costs, monitoring cash flow and focusing on high-margin product lines can be ripe for growth,” Infanti explained.
In addition, 77% of SMEs intend to increase their workforce over the next three years to carry out their growth plans and 20% expecting an increase in hiring of at least 11% over the next three years. during this period. However, 56% of SMEs agree that it is difficult to recruit the future talents needed to transform their business, which makes hiring a major challenge in the coming years.
Mr. Infanti said that while these companies weathered the recession with ease, it was essential to employ or pursue strategies and investments that position themselves for longer-term growth. “It’s about trying to find the right balance between a potential downturn — managing costs and cash flow, taking a digital break — but recognizing that all of those things are critically important to achieving growth, continue to invest and reinvest in digital, transformation, talent development, etc. he clarified.
According to the survey, other key risks to growth over the next three years include inflationary pressures, rising interest rates, as well as cybersecurity issues.