Small and medium businesses in Canada are more optimistic than last year, and companies with an online presence are most confident about continued growth according to eBay Canada’s annual SMB Optimism Index report.
Even though 2018 brought some new challenges and uncertainty around NAFTA renegotiations and policy changes in the U.S., according to eBay SMBs are increasingly optimistic, up by one point on the index from last year, hitting 76 points, which has been a consistent trend in the report over the past three years.
eBay’s annual index report surveys retailers in the SMB market across Canada to see what they think about the market in terms of growth, challenges and opportunities.
This year the report found that businesses who take advantage of exporting are the most optimistic (79 per cent), with those having an online presence coming in a close second with 78 per cent feeling good about market opportunities.
And with Canada, the U.S. and Mexico finally reaching a new trade agreement, SMBs in general have more to look forward to according to Export Development Canada (EDC), which states, “(USMCA) includes new rules to facilitate e-commerce, provisions to allow small businesses to benefit more from participation in international markets, and stronger rules on labour and the environment.”
Of those surveyed by eBay, 80 per cent felt confident about business prospects for this year, with those 35 years of age or younger or those who have started a business in the past five years to be most likely to agree with that statement.
Small and medium businesses involved in exporting “are far more likely than non-exporters to believe in new market opportunities for their businesses, both international and domestic,” (79 per cent compared to 49 per cent respectively), with companies who sell online and female entrepreneurs most confident about these opportunities.
An increasing number of SMBs are starting to recognize the importance of export in growing a business with 57 per cent of retail SMBs currently exporting compared to only 38 per cent in 2017. And almost half of those involved in exporting are projecting that their export sales will increase over the next five years.
“Exporting is key to unlocking growth opportunities, and technologies like e-commerce and global marketplaces like eBay are democratizing global trade like never before. There is good reason for increased optimism among the Canadian SMB community,” says Andrea Stairs, general manager of eBay Canada & Latin America in the press release. “The ability to tap into U.S. market demand is particularly vital for Canadian SMBs looking to scale.”
Technology and e-commerce are indeed playing an important role according to the report which states that exporters, specifically those who participate in e-commerce, are more likely than their non-exporting counterparts to incorporate new technologies and believe these type of innovations will have a positive impact in their businesses.
Barriers still remain
“Businesses don’t like uncertainty, and that uncertainty can have a big impact on markets,” stated the report from EDC, “One recently-developed proxy suggests that uncertainty in Canada about economic policy, especially uncertainty about U.S. trade policy has been high since President Trump’s election.”
Luckily it also finds that thousands of companies in North America that operate internationally should feel more confident now that a formal trade agreement has been reached.
But despite the new agreement and an increasing number of these businesses moving into international markets, 93 per cent say there are barriers to expanding their exports globally, with the top barriers being lack of efficient shipping options, international trade policies and some were still worried about U.S. trade relations according to the eBay report.
“Canadian retail SMBs are thinking globally and have the tools and technology available to them to reach customers around the world,” stated Stairs in the release, “but some fundamental infrastructure and policy issues persist that constrain their ability to participate in global trade.”