Business & Agriculture - ATB · 2019-10-24 · Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 ATB...

Business & Agriculture

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Alberta Business Beat Volume 6, July 2014


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Background and Methodology

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Background & Objec1ves

Background •  ATB Financial commissioned NRG Research Group to conduct a survey of 300 randomly selected

small- to medium-sized businesses in Alberta each quarter, beginning in Q1 2013. •  The purpose of the study is to gain an understanding of the challenges faced by small- to

medium-sized businesses in Alberta, and to track confidence in the business climate in Alberta.

Research Objectives » Measure business owners and managers’ perceptions of the current business climate

compared with six months ago, as well as their assessments of what the business climate will be like six months from now; » Understand how SMEs are impacted by fraud. What is their perception of the risk and

incidence of fraud? What types of fraud do they face, and how do they mitigate this risk?; and, » Profile the firmographics as well as respondent demographics for small- to medium-sized

businesses in Alberta.

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Methodology

• Alberta SMEs

Qualifying Businesses

< 500 employees, <$20 million

annual revenues, must be financial decision makers or

influencers • Excluded agriculture, government, financial ins1tu1ons, media, market research, PR, adver1sing and communica1ons

sectors

Field dates: June 2 -‐ 16, 2014

• Telephone •  Approximately 3,000 businesses contacts

made and 300 completed the survey • Margin of error is +/-‐

5.8%

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One in four (25%) Alberta SMEs report having experienced fraud or attempted fraud in the past year

Credit/debit card fraud is most common type of fraud (29%), followed closely by phishing/email hacking (27%) and theft of physical property (27%)

A positive outlook reigns with ATB Economic Index at 87% and ATB Business Index at 94%

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3

Key Insights


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The ATB Business Beat Index

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A very optimistic future

Alberta Economy

87% will be be\er off or the

same

Your Company

94% will be be\er off or the

same

“How do you think… will be six months from now?”

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 300.

(±) Change from last quarter

-‐1 -‐2

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70.2 69.8 69.8 72.3

75.1 73.1

55.4

59.8

66.2 66.8 68.8

70.9

40

45

50

55

60

65

70

75

80

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

ATB Business Index

ATB Economy Index

The ATB Business Beat Index

Data time periods: Q1 2013= Jan 2013, Q2 2013 = May 2013, Q3 2013 = Aug/Sept 2013, Q4 2013 = Dec 2013, Q1 2014= Mar 2014., Q2 2014 = June 2014

Source: ATB Financial, Survey on Alberta SMEs 2013-14.

Index (0-100) ATB Business Beat Index

Less op/mis/c about future performance

More op/mis/c about future performance

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70.2 69.8 69.8

72.3 75.1 73.1

69.1

77.8 78.8

72.2

83.3 80.3

55.4 59.8

66.2 66.8

68.8 70.9

54.2

67.6

72.1 68.9

68.5

78.2

40

45

50

55

60

65

70

75

80

85

90

Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014

ATB Business Index

ATB Business Index (Energy)

ATB Economy Index

ATB Economy Index (Energy)

The ATB Business Beat Index - Energy

Source: ATB Financial, Survey on Alberta SMEs 2013-‐14.




Data time periods: Q1 2013 = Jan 2013, Q2 2013 = May 2013, Q3 2013 = Aug/Sept 2013, Q4 2013 = Dec 2013, Q1 2014 = Mar 2014., Q2 2014 = June 2014

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70.2

69.8 69.8 72.3

75.1 73.1 70.7

63.8 66.0

77.5 75.6

79.2

55.4

59.8

66.2 66.8

68.8 70.9

59.1

50.0

67.7 68.3

68.5

76.4

40

45

50

55

60

65

70

75

80

85

90

Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014

ATB Business Index

ATB Business Index (Retail)

ATB Economy Index

ATB Economy Index (Retail)

The ATB Business Beat Index – Retail






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70.2 69.8

69.8

72.3 75.1

73.1 72.2

85.2

69.5 73.7

81.7 83.9

55.4 59.8

66.2 66.8

68.8 70.9

54.1

78.6

65.5

68.4

78.3

75

40

45

50

55

60

65

70

75

80

85

90

Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014

ATB Business Index

ATB Business Index (Construction)

ATB Economy Index

ATB Economy Index (Construction)

The ATB Business Beat Index - Construction







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Perception of Fraud Risk

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SMEs perceive fraud risk as unchanged

1%

1%

71%

17%

8%

Decreased a lot

Decreased a liMle

Stayed the same

Increased a liMle

Increased a lot

“In the past year, do you think that the level of risk that fraud poses to your business has…?”


25% Believe their level of fraud risk

has increased

SMEs in the retail industry (43%) are more likely than Energy (21%) and Construction (23%) SMEs to perceive an increased fraud risk in the past year.

“I WORK IN A VERY STABLE ENVIRONMENT. THERE ISN'T MUCH CHANGE AND WE DON'T INTERACT WITH THE PUBLIC VERY MUCH.“ CEO or President, Transporta2on, 98 years in business, 200-‐499 employees, Less than $250K in revenues.

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SMEs explain perceptions of fraud risk

5%

5%

7%

11%

12%

45%

Increased telephone abuse/misrepresenta/on

Increased credit/debit card fraud

More opportuni/es and/or methods to commit fraud

More people aMemp/ng to commit fraud

Increased technology to enable fraud

Increased cybercrime/phishing

Increased (n = 74)

Source: ATB Financial, Survey on Alberta SMEs, June 2014, 300 respondents.

5%

6%

7%

7%

13%

13%

29%

Take precau/ons to reduce fraud

Clear and uniform accoun/ng procedures

Increased vigilance/awareness

Good rela/onships with customers/clients

LiMle poten/al/risk for fraud

No change to the level of fraud experienced

Have not experienced any fraud

“Why do you think that the level of risk that fraud poses to your business in the past year has…”

Stayed the Same (n = 214)


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Fraud Experience Among Alberta SMEs

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One in four Alberta SMEs impacted by fraud


25%

74%

Yes No

“To your knowledge, has your business experienced any type of fraud or attempted fraud in the past year?”

Percentage impacted within industry

49%

26% 26%

0%

10%

20%

30%

40%

50%

60%

Retail Energy Construction

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Who experiences the most fraud incidents?

Small SMEs (5 to 49 employees) are most likely to

have experienced fraud.

As revenue increases, so do the number of fraud

incidents

Percentage of SMEs from each organization size and revenue category that have experienced fraud in the past

year 16%

35% 27%

0%

10%

20%

30%

40%

0 to 4 5 to 49 50 to 499

15% 18% 20%

26% 30%

35%

0% 5%

10% 15% 20% 25% 30% 35% 40%

< $250K $250K to $500K

$500K to $1MM

$1MM to $3MM

$3MM to $10MM

$10MM or more

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 75 SMEs that experienced fraud in the past year.

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25% of SMEs report experiencing at least one incident of fraud or attempted fraud within the last year.

41% of these SMEs report between 2 to 5 separate incidents of fraud or aMempted fraud within the last year.

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 75 SMEs that experienced fraud in the past year.

When losses were incurred as a result of fraud, the average cost was $24,000.

17%

23%

21%

29%

$10,001 or more

$1001 to $10,000

$1 to $1000

None

“What would you estimate to be the total value of financial losses incurred by your business as a result of fraud in the past year?”

Fraud can be frequent and costly

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Types of fraud experienced

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 75 SMEs that experienced fraud in the past year, responses mentioned by 5% or more are shown.

5%

5%

7%

9%

27%

27%

29%

The[ of proprietary informa/on and intellectual property

Iden/ty fraud

Telephone abuse/misrepresenta/on

Supplier fraud/false invoices

Phishing/email hacking

The[ of physical property

Credit/debit card fraud

Credit/debit card fraud Most common fraud for

Retail SMEs (39%)

“Please describe the types of fraud your business has experienced in the last year?”

“JUST AS TECHNOLOGIES CHANGE AND PROGRESS, WE KEEP UP WITH IT AND THE OLD WAYS DISAPPEAR. AS OLD THIEVES DIE NEW THIEVES ARE BUILT. IT STAYS ABOUT THE SAME.” Owner/Operator, Business Services, 10 years in business, 1-‐4 employees, Less than $250K in revenues.

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Fraud is uncovered in a variety of ways

7%

11%

11%

12%

13%

16%

Identified by surprise audit

Identified by scheduled audit

Reported by employees

Uncovered by data mining and data analysis

I discovered it myself

Uncovered by financial institution


“Thinking about the fraud your business experienced in the last fiscal year, how was the fraud uncovered?”

29% of customer fraud is discovered by the SME’s FI

70% of SMEs that discovered fraud themselves believe that their fraud

risk has increased over the past year

“WE ARE ANNUALLY AUDITED FOR THE MUNICIPAL GOVERNMENT ACT. THERE ARE BALANCES AND CHECKS INVOLVED IN AN AUDIT.” Administrator, Government Services, 64 years in business, 1-‐4 employees, $1M to $3M in revenues.

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7%

21%

23%

55%

Someone else

Internal to your business

A customer

External to your business


“Still thinking about this same incident of fraud, was it perpetrated by someone...”

The bulk of fraud against Alberta SMEs is external

73% of SMEs that experienced fraud perpetrated by someone external to their organization do not plan to invest to reduce fraud risk.

Only 8% of SMEs without a storefront that experienced fraud in the past year report that it was perpetrated by a customer.

“WE DON'T KNOW WHO IT WAS. THERE WAS NO WAY OF TRACKING, THEY'RE CRIMINALS, WHOEVER THEY ARE.”

GM or Office Manager, Health Care and Social Assistance,

40 years in business, 20-‐49 employees,

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SMEs absorb the cost of fraud

5%

11%

11%

63%

Covered by someone else

Covered by your bank

Covered by your insurance provider

Absorbed by your business


“Again thinking about this same incident of fraud your business experienced, were the financial losses incurred by your business”

Only 43% of Construction SMEs had to absorb the financial losses incurred

as a result of fraud (vs. 78% of Retail and 60% of Oil & Gas)

38% of SMEs who had to absorb the financial losses incurred as a result

of fraud plan to invest to reduce their fraud risk

27% of SMEs that experienced fraud

did not have to absorb the

financial losses themselves


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Fraud Detection and Prevention

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SMEs even on need to improve fraud controls


“Please tell me whether you agree or disagree with each of the following statements about the potential impact of fraud on your business”

8%

12%

11%

8%

18%

33%

32%

21%

7%

8%

8%

8%

28%

27%

26%

32%

36%

19%

22%

28%

The ammount of time you spend worrying about fraud has increased over the past year

Your business needs to improve in the area of fraud detection

Your business needs to improve in the area of fraud prevention

Your business has allocated noticably more resources to preventing or detecting fraud in the

past year

Strongly agree Somewhat agree Neither Somewhat disagree Strongly disagree

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SMEs plan to invest to reduce technofraud

8%

9%

14%

17%

19%

Physical safeguards to secure company assets

Fraud awareness and ethics training among

employees

Data or IT security

Clear and uniform accounting procedures

Upgrade IT systems

“What measures does your business currently use to reduce the risk of fraud?”


“INTERNET BASED. COMPUTER DRIVEN, TO PREVENT SOMEONE WHO CAN HACK INTO THE SYSTEM.” GM or Office Manager, Energy or Oil & Gas, 8 years in business, 5-‐19 employees, $10M to less than $15M in revenues.

“ADDING SECURITY SYSTEMS AND ADDING FIREWALLS TO THE WEB BASE SERVER.”

GM or Office Manager, Energy or Oil & Gas, 23 years in business,

20-‐49 employees, $10M to less than $15M in revenues.

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Most SMEs do not plan on investing to reduce fraud

15%

84%

Yes No

“In the next year does your business plan to invest any funds to reduce your potential

exposure to fraud?”

9%

28%

60%

We would like to but can't afford the extra costs

We have some exposure but our risk is acceptable

We are satisfied that our current procedure will protect us

No (n = 253)

“What is the main reason your business does not plan to invest to reduce fraud risk over the next year

“BECAUSE THE CLIENTELE THAT WE DEAL WITH AND THE MANNER THAT WE DEAL WITH THEM HAS NOT CHANGED. WE HAVE NOT DONE ANY MORE OR ANY LESS WITH ONLINE SALES.” CEO or President, Other Industry, 34 years in business, 5-‐19 employees, $1M to $3M in revenues.

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 253 SMEs who do not plan to invest to reduce fraud exposure.

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15%

84%

Yes No

SMEs that do plan on investing to reduce fraud…

5%

5%

9%

11%

16%

48%

Improve accoun/ng system

Inventory tracking procedures

Fraud awareness and ethics training among employees

Upgrade IT systems

Physical safeguards to secure company assets

Data or IT security so[ware

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 44 SMEs who plan to invest to reduce fraud exposure.

“What do you believe will be the main fraud prevention measure that your business will invest in over the next

year? ”

(n = 44)

“In the next year does your business plan to invest any funds to reduce your potential

exposure to fraud?”


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APPENDIX: Firmographics & Respondent Demographics

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Half of Alberta SMEs earn revenues in excess of $1,000,000


47%

43%

10% 0 to 4 'Micro'

5 to 49 'Small'

50 to 499 'Med'

20%

13%

10% 21%

13%

13% < $250k

$250-‐500k

$500k-‐<$1MM

$1-‐<$3MM

$3-‐<$10MM

$10MM+

Number of Employees Annual Revenues 2013

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11%

12%

12%

11%

53%

Less than 5 years

6 to 10 years

11 to 15 years

16 to 20 years

Over 20 years

53%

32%

6%

4%

1%

4%

No borrowing needs

Less than $1MM

$1 to < $3MM

$3 to < $10MM

$10MM+

Don't know/Refused

Business Firmographics


$1MM+ 11%

Borrowing Needs # of Years in Operation

MEAN 26 years

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Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 300, responses mentioned by 4% or more are shown.

Industry

14%

13%

11%

7%

6%

5%

5%

5%

4%

4%

Energy/ Oil & Gas

Retail Trade

Construction

Health Care & Social Asst

Manufacturing

Prof, Sci & Tech

Transp/ Warehouse

Education

Real Estate

Arts, Entertain & Rec

Franchise Industry (n = 18) Retail 4 Automotive 4 Food Services 4 Advertising & Printing 2 Energy/ Oil & Gas Services 2 Financial Services/ Insurance 1 Travel, Leisure & Accommodation 1 Other 3

6% of interviewed SMEs are franchises

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52%

29%

19%

Urban area(s) only

Both urban and rural areas

Rural area(s) only



Business Location(s)

48% of SMEs only conduct business

in Alberta

95%

49%

25%

15%

Within Alberta

In other parts of Canada

In the US

In international markets outside of Canada or the US

Business Scope

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53%

47%

Yes

No

Does your business have a store front?

Business Firmographics Business Life Stage Phase

2%

8%

32%

22%

24%

11%

Start-up

Initial Growth

Established

Expansion

Mature

Winding Down

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Respondent Demographics

Source: ATB Financial, Survey on Alberta SMEs, June 2014, n = 300, responses mentioned by 4% or more are shown.

53%

18%

17%

8%

5%

4%

4%

Owner/ Operator

Chief Executive Officer (CEO) or President

General Manager (GM) or Office Manager

Managing Director, Senior Director or Director

Controller

Vice President

Chief Financial Officer (CFO)

8%

15%

32%

31%

11%

18-34

35 to 44

45 to 54

55 to 64

65+

42% 55+ Title/ Role Age

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Male 61%

Female 39%

43%

43%

13%

Sole decision-maker Shares responsibility Influences decisions

Respondent Demographics


Role in Financial Decisions Gender


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Judy Duncan Director Marketing, B&Ag (403) 974-6884 [email protected]

Cody Tousignant Senior Research Manager Customer Insights (403) 731-3507 [email protected]

Business & Agriculture - ATB · 2019-10-24 · Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 ATB...

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