IT investment not priority for Canadian small business

Technology investments are at the bottom of the list of priorities for Canadian small businesses, according to a survey recently released by Sage Software Inc.

The survey commissioned by the accounting and management software maker also found that local small businesses can’t shake the feeling that government has somehow let them down.

Respondents to the poll carried out by Populus Ltd. indicated that Canadian small business owners consider entrepreneurial spirit, domestic market and Canada’s exchange rate as the top three most favourable aspects of doing business in the country. On the flipside, small businesses cited bureaucratic red tape and taxes as the two most unfavourable factors of conducting commercial activities in Canada.

“Small businesses are focused on growth and sales and owners just don’t see IT (information technology) as a driver for sales and growth,” said Nancy Harris, vice-president and general manager of Sage.

Small businesses do realise the importance of technology and set aside budget for tech-related expenses. “The frequent response we got was that technology makes for better customer service and improved processes,” Harris said.

Harris said the top three IT investments by small businesses are in:

  • Mobile capability building
  • Web site management
  • Document management

But the top areas where small businesses put their money in are:

  • Sales and marketing efforts (28 per cent)
  • Reinvestment (23 per cent)
  • Diversifying into new markets (23 per cent)
  • IT investments (18 per cent)

Government gets a poor score

The survey found that despite the slowing economy, Canadian small business owners are generally optimistic about their prospects and the country’s economy as a whole. The survey found that 45.26 per cent of respondents were confident of the global economy.

On a scale of 0-100, where 50 is considered neutral, values above 50 are considered optimistic and those below 50 denote pessimism, business owners rated their own prospects at 59.38 and for Canada’s economy 56.09.

The three most favourable reasons for conducting business in Canada were:

  • Entrepreneurial spirit (42 per cent)
  • Domestic market (34 per cent)
  • Canada’s exchange rate (33 per cent)

The most unfavourable aspects of conducting business in the country, according to the respondents, were:

  • Government bureaucracy and legislation (52 per cent)
  • Lack of tax relief (38 per cent)
  • Government’s handling of current economic challenges (26 per cent)

Harris said many businesses felt these shortcomings were holding them back.

“Of the respondents who cited government bureaucracy and legislation as a drawback to business, 38 per cent identified current tax laws and another 28 per cent named labour laws as the most burdensome areas to deal with,” she said.

Harris, however, said the survey did not go into the details regarding which specific tax and labour laws were causing problems for small businesses.

“Taxes and regulations and paper burden, also known as red tape are among the greatest operating challenges for SMBs,” said to Michael McAvoy, director of SMB and commercial marketing at HP Canada.

McAvoy said a recent survey his company commissioned in partnership with the Canadian Federation of Independent Business (CFIB) showed that small businesses want government to reduce barriers such as red tape and high taxes to enable businesses to flourish and create jobs.

Early this year, the Conservative government released a budget that included some $720 million dollars to be released over a period of three years to encourage the use of digital technologies and the give the local IT industry a boost.

Some $80 million of that amount will represent new funding for the Industrial Research Assistance Program to help small and medium sized businesses speed up their adoption of information and communication technologies through collaboration with colleges and universities.

“While the amounts are not large, they can go a long way to addressing the need to promote student enrolment in science and technology courses,” said Bernard Courtois, president and CEO of the Information
Technology Association of Canada.

Courtois said such measures are needed create a digital economy strategy “if we don’t want Canada to fall behind.”

When asked about the challenges they faces in the last six months, respondents cited:

  • Rising costs (46 per cent)
  • Maintaining and growing revenue (43 per cent)
  • Gaining new customers (41 per cent)

“Although Canadian businesses are becoming more confident in their prospects for the future and the country’s economy, the bureaucratic legislation walls are preventing them from fully thriving,” said Harris

Nestor ArellanoNestor Arellano is a Senior Writer at Follow him on Twitter, read his blog, and join the IT Business Facebook Page.

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