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Labour shortage continues to limit SME investment intentions: BDC study

Over half of entrepreneurs will limit investment in 2019 due to lack of qualified workers
15/01/2019

January 15, 2019, Montreal—Investment intentions among Canadian entrepreneurs remain stable amid a shortage of qualified labour and confidence in the economy, according to BDC’s fourth annual report on the investment intentions of small and mid-sized enterprises (SMEs).

Over half of SMEs (53%) say the labour shortage will cause them to limit business investment in 2019. This is the second year in a row the problem is cited as the top obstacle to investing. In a previous study, BDC found that SMEs are struggling to find new employees and the problem will not improve. Next-cited reasons for not investing are insufficient cash flow (48%) and confidence in Canada’s economy (43%).

Business optimism remains stable nationwide, with 73% of SMEs expecting their revenues will grow in 2019, compared toY 72% last year.

At the same time, SMEs are shifting their investment plans to reflect the digital transformation of Canada’s economy, with four in 10 businesses planning to devote all or some of their investment to new technologies.

“It is encouraging to see some optimism from Canadian businesses as they adapt to the labour shortage and digital technology,” says Pierre Cléroux, Vice President, Research and Chief Economist at BDC. “SMEs make up 99.7% of Canadian companies, so their success is crucial to the economy. Companies can better meet today’s challenges if they invest in retaining workers, hiring newcomers to Canada and adopting new technology.”

Other findings:

  • The sectors with the brightest investment outlook are wholesale, technology and business services.
  • Exporting businesses are more likely to plan new investment in technology, thanks to a low Canadian dollar and strong U.S. demand.
  • More entrepreneurs plan to invest in intangible assets such as software and intellectual property. High-growth firms are focused on buying new technology, with 59% planning such investments compared to 43% of all businesses.

The 2019 Investment Intentions report is based on a phone survey of 4,024 business owners conducted in the Fall of 2018.

About BDC

BDC is the only bank devoted exclusively to entrepreneurs. It promotes Canadian entrepreneurship with a focus on small and medium-sized businesses. With its 123 business centres from coast to coast, BDC provides businesses in all industries with financing and advisory services. Its investment arm, BDC Capital, offers equity, venture capital and flexible growth and transition capital solutions. BDC is also the first financial institution in Canada to receive B Corp certification. To find out more, visit bdc.ca.

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