‘Inertia’ the main limiter on SMB growth: study

According to a recent study, SMBs are failing to embrace overseas trade due to a reluctance to tackle complicated paperwork and regulations.

The study, conducted on behalf of UPS Canada, suggests that about a third of SMBs believe international expansion would be positive for the Canadian economy, but these businesses have a difficult time overcoming their own inertia.

Other barriers cited include: the costs involved, trade regulations, border delays, customs paperwork, foreign contract processing, finding trustworthy partners, tax structures and cultural differences between trading nations.

TNS Canadian Facts conducted the study for UPS Canada. The researcher interviewed 637 SMBs in Canada with 1-249 employees. The idea of international expansion was appealing to this group (only 15 per cent said it would be a negative for their business), but few believed they had the wherewithal to actively pursue expansion.

“Despite a generally bullish attitude for future economic growth in Canada, actual plans to move businesses onto a more global footing were less likely,” said Amy Knowles, research director at TNS, during a recent Webcast.

Of the SMBs TNS interviewed, four in 10 said they already have enough business to sustain them in Canada, two in 10 said they had concrete plans to expand and about 10 per cent said it would be too expensive to consider.

One of the main problems, said Knowles is a lack of confidence or know-how. One-third of respondents said they simply didn’t know why they haven’t expanded beyond their own national borders.

“There appears to be a sense of apathy. Although there may be challenges in moving businesses beyond the border or altering supply chain formulas, entrepreneurs have the ability to take advantage of global trade,” said Mike Tierney, president of UPS Canada.

Canada is being outpaced by India, China, Russia and a number of other markets, he said, because they’re more willing to try to overcome the complications associated with cross-border business.

SMBs need to be more willing to use technology to their advantage, said Tierney. He said that UPS has software designed specifically for small businesses that will help them deal with paperwork and customs calculations for more 200 nations.

According to TNS, SMBs represent 98 per cent of overall business conducted in Canada. “Despite reticence to enter the global market, Canadian SMBs are generally very positive about the future economic growth of Canada,” said Knowles.

But SMBs won’t be able to rest on their laurels if they wish to compete globally – particularly in an Internet economy – said Tierney.

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