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Small business owners investing for future growth

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

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“Low interest rates are a driving factor, as well as increased business owner awareness that future growth and competitiveness depend on investments today,” said Mike Michell, national director, Small Business, RBC. “In fact, seven-in-ten business owners 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%) 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%), no need to invest in these areas (32%), and a lack of capital funding (11%).

British Columbia

On par with the national average, 66% of business owners in BC plan on investing in their company over the next two years. BC entrepreneurs will focus their investments on new equipment (39%), new products and services (28%), new technology (23%), new processes (12%) and new employees (10%).

Alberta

Two out of three 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%).

Manitoba and Saskatchewan

Small business owners in Manitoba and Saskatchewan are least likely to invest in their company over the next two years (63%). Prairie entrepreneurs lead the country when it comes to investing in new equipment (41%), but have the lowest percentage (6%) of entrepreneurs with plans for new employees.

Ontario

Two out of three 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%), new technology (34%), new products and services (28%), new processes (11%) and new employees (9%).

Quebec

Two out of three 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%).

Atlantic Canada

Atlantic Canadian entrepreneurs lead the country when it comes to plans for investing, as 72% 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%) and new products and services (30%).

Tips for Investing in Your Business

• 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.
• 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.
• 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.