Alberta Business BeatVolume 1, March 2013
Background and Methodology
Business & Agriculture
Background & Objectives
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 Q4-FY2013.• The purpose of the study is to gain an understanding 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 internal and external factors that may impact small- to
medium-sized businesses in Alberta, such as reliance on the price of natural resources or the challenges of various areas of business management; »Gauge the likelihood of investment plans in a number of different areas,
such as investment in technology or expansion into new foreign or domestic markets;»Understand potential challenges for small- to medium-sized businesses in
growing their businesses; and,»Profile the firmographics as well as respondent demographics for small-
to medium-sized businesses in Alberta.
Business & Agriculture
Methodology
• Randomly selected Alberta SME’s
Qualifying Businesses
< 500 employees<$20 million
annual revenuesMust be financial
decision makers or influencers• Excluded
agriculture, government,
financial institutions, media,
market research, PR, advertising
and communications
sectors
Field dates:January 22-31,
2013
Telephone + online option
• Over 3,000 businesses contacts
made and 303 completed the
survey• Margin of error is
+/- 5.8%
Key Insights
Business & Agriculture
Key Insights
Optimism remains high despite talk of the ‘bitumen bubble’.
Alberta’s population is growing quickly and there is still a skilled labour gap.
There a need for succession planning in Alberta.
Detailed Findings
Alberta Business Landscape
Business & Agriculture
Make-up of Alberta Businesses
98.1% employ less than 50 people (Small)
Source: Statistics Canada, Business Register (based on business locations), December 2011.
81.6% employ less than 5 people (Micro)
1.8% employ 50 to less than 500 employees (Mid-sized)
Small & Medium Sized Enterprises (SMEs)
Business Confidence
Business & Agriculture
Optimistic about the future
Alberta Economy
76%will be better off or the
same
Your Company
87%will be better off or the
same
86% of Alberta SMEs agree their business success is tied to the Alberta economy
“HOW DO YOU THINK …………… WILL BE SIX MONTHS FROM NOW?”
Source: ATB Financial, Survey on Alberta SMEs, January 2013, 303 respondents.
Business & Agriculture
The price of oil and gas has a direct impact on a SME’s business success
the price of a barrel of oil
the price of a natural gas
70%
48%
% AGREE THE SUCCESS OF
THEIR BUSINESS IS TIED TO ……
Source: ATB Financial, Survey on Alberta SMEs, January 2013, 303 respondents.
Business & Agriculture
Energy patch optimism
$48.24 billion in capital in 2013
Last energy boom in 2006-08
Since survey, weaker energy
prices
Source: Statistics Canada, CANSIM table 029-0005.
Business Growth
Business & Agriculture
Intentional growth is paying off
7 in 10 of SMEs are intentionally
trying to grow their business.
Purchase another company
Expand in foreign markets
Purchase/build commercial real estate
Invest in R&D
Commercialize new products or services
Expand in domestic markets
Invest in new IT
Purchase equipment/machinery
10%
16%
17%
19%
28%
39%
40%
63%
OVER THE NEXT 24 MONTHS, DO YOU HAVE ANY
PLANS TO…? “% YES”
48% are seeing growth in their business as a result of their
efforts.16% are
experiencing ‘organic’ growth.
Source: ATB Financial, Survey on Alberta SMEs, January 2013, 303 respondents.
Business Challenges
Business & Agriculture
Challenges for small & mid-size business
Source: ATB Financial, Annual Business Banking Survey, March 2012.
Business & Agriculture
Where do SMEs spend their time?
Sales &
Cus
tom
er A
cquisit
ion
Human
Res
ourc
es &
Lab
our
Mar
ketin
g, A
dver
tising
& PR
Stra
tegy
& Fut
ure
Plan
ning
Accou
nting
Info
rmat
ion
Tech
nology
Opera
tions
Man
agem
ent
Risk M
anag
emen
t
Building
& Offi
ce A
dmin
-5%
0%
5%
10%
15%
20%
25%
30%Most Time Spent Most Important Most Difficult
Source: ATB Financial, Survey on Alberta SMEs, January 2013, 303 respondents.
Business & Agriculture
What is causing them grief?
Building & Office Admin
Risk Management
Accounting
Marketing, Advertising & PR
Operations Management
IT (hardware & software)
Strategy & Future Planning
Sales & Customer Acquisition
Human Resources & Labour
3%
7%
7%
8%
7%
10%
12%
16%
27%
4%
5%
8%
8%
10%
8%
13%
10%
22%
1st Most Difficult 2nd Most Difficult
Source: ATB Financial, Survey on Alberta SMEs, January 2013, 303 respondents.
49%
26%
17%
16%
15%
7%
12%
25%
18%
Business & Agriculture
Alberta’s population is growing
Source: Statistics-Canada, The Daily, Mar. 20, 2013.
Alberta’s population grew by 3.0 per cent; more than double the national average (1.1 per cent).
Doesn’t this indicate Alberta has a strong labour market?.
Business & Agriculture
What are the HR & Labour challenges?
Finding and attracting quality labour
Replacing key employees
Managing young Gen Y workers
Managing current staff/ employee retention
Overall competitive salaries
Offering competitive benefits
Training
High employee turnover
Replacing retiring employees
Supporting or managing a mobile workforce
Payroll management
Employee theft
86%
69%
58%
54%
44%
39%
33%
31%
28%
23%
11%
11%
Source: ATB, Survey on Alberta SMEs, Jan 2013, with 147 respondents reporting HR & Labour is the most/ second most difficult.
Business & Agriculture
What are the Sales & Customer Acquisition challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 78 respondents reporting Sales & Customer Acquisition is the most/ second most difficult.
Competition from large businesses
Seasonality
Competition from other small businesses
Lead generation
Customer retention
Up-selling and cross-selling existing customers
49%
49%
45%
35%
35%
31%
Business & Agriculture
What are the Strategy & Future Planning challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 75 respondents reporting Strategy & Future Planning is the most/ second most difficult.
Managing growth and expansion
Focusing business efforts
Succession planning
Product or market diversification
Creating partnerships
Entering emerging or international markets
71%
36%
35%
31%
13%
13%
Business & Agriculture
Succession planning and Baby Boomers
Sources: 1. ATB, Survey on Alberta SMEs, Jan 2013, 303 respondents & 2. ATB Customer Advisory Panel, Feb/Mar 2013, 284 business panelists.
42% of SME owner/operators report being 55+ years of age1.
Are Alberta SMEs ready for their succession?
=> Their businesses are 2-5 times more likely to be in the Mature or Winding Down phases.
48% of ATB Customer Advisory Panel business panelists (aged 55+) do not have a succession plan2.
Business & Agriculture
What are the IT (hardware & software) challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 55 respondents reporting the area of IT is the most/ second most difficult.
Keeping up with new technology
Software or equipment upgrades
Durable IT or equipment malfunction
Maintaining website, blog, or other digital properties
Integrating disparate systems
Data security
Viruses and other threats
Data storage
Mobile computing
CRM software
75%
65%
53%
49%
44%
33%
29%
29%
25%
16%
Business & Agriculture
What are the Operations Management challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 50 respondents reporting Operations Management is the most/ second most difficult.
Inventory management
Meeting service level agreements
Coordinating across internal groups
Product transportation costs
Product innovation
38%
34%
32%
30%
28%
26%
26%
14%
14%
Business & Agriculture
What are the Marketing, Advertising and Public Relations challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 49 respondents reporting the area of Marketing, … is the most/ second most difficult.
Designing creative for marketing/ advertising
Marketing using social media
Selecting marketing channels
Networking and driving word-of-mouth
Reputation management
Community engagement
Website development & optimization
Search engine optimization (SEO)
Search engine marketing (SEM)
Market segmentation
49%
45%
45%
43%
41%
39%
35%
35%
33%
29%
Business & Agriculture
What are the Accounting challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 45 respondents reporting the area of Accounting is the most/ second most difficult.
Filing taxes and related administra-tive tasks
Late payments from customers
Inflation
Securing capital/ financing
Debt management
High interest rate on credit
Fluctuating currency values
64%
38%
27%
18%
18%
16%
16%
Business & Agriculture
What are the Risk Management challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 37 respondents reporting Risk Management is the most/ second most difficult.
Staying up-to-date on legislative and regulatory changes
Other industry-specific risks
Mitigating or managing employee-related liability
Legal costs
Loss prevention (theft)
Intellectual property protection
Fraud protection
Disaster recovery planning
57%
41%
27%
27%
24%
16%
11%
11%
Business & Agriculture
What are the Building & Office Admin challenges?
Source: ATB, Survey on Alberta SMEs, Jan 2013, 22 respondents reporting Building & Office Admin is the most/ second most difficult.
Office real estate (e.g., rent cost too high, finding appropriate space)
Cost of utilities
Cost of property insurance
Managing travel costs/ requirements
Office furniture not functional or flexible
Ordering office equipment or supplies
Shipping and mailing
45%
32%
32%
14%
14%
9%
5%
Questions?
APPENDIX: Business Firmographics & Respondent Demographics
Business & Agriculture
Majority of Alberta SMEs earn revenues in excess of $500,000
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents.
Of the SMEs we surveyed, more than half have fewer than five
employees, over six in ten (61%) report earnings in excess of
$500,000 in 2012.
54%39%
7%
0 to 4 'Micro'
5 to 49 'Small'
22%
17%
13%19%
17%
13%
< $250k$250-500k$500k-$1MM$1-$3MM$3-10MM$10MM+
Number of Employees
Annual Revenues 2012
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents.
Business FirmographicsBusiness Life Stage
PhaseIntentional
GrowthStart-up
Initial Growth
Established
Expansion
Mature
Winding Down
4%
9%
39%
17%
20%
10%
Intentional Growth
Organic Growth
No Growth, but Trying
No Growth, NOT Trying
48%
16%
21%
13%
69% of SMEs are TRYING to
grow their business
Business & Agriculture
1 to 5 years
6 to 10 years
11 to 15 years
16 to 20 years
Over 20 years
11%
13%
17%
14%
45%
No borrowing needs
Less than $1MM
$1 to < $3MM
$3 to < $10MM
$10MM+
Don't know/Refused
47%
36%
7%
3%
3%
5%
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents.
$1MM+
13%
Borrowing Needs
# of Years in Operation
MEAN24
years
Business & Agriculture
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents, responses mentioned by 3% or more are shown.
Industry
Energy/ Oil & Gas
Construction
Prof, Sci & Technical
Manufacturing
Transp/ Warehouse
Education
21%
16%
14%
6%
6%
4%
4%
3%
3%
3%
3%
Franchise Industry (n=22)Automotive 4
Retail 4
Beauty & Fitness 2
Energy/ Oil & Gas Services 2
Financial Services/ Insurance
2
Health 2
Travel, Leisure & Accommodation
2
Non-profit 2
Education 1
Food Services 1
7% of SMEs are
franchises
Business & Agriculture
47%
28%
26%
Urban area(s) onlyBoth urban and rural areasRural area(s) only
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents.
Business Location(s)
53% of SMEs only conduct business in
Alberta
Within Alberta
In other parts of Canada
In international markets outside
of Canada
97%
43%
24%
Business Scope
Business & Agriculture
Respondent Demographics
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents, responses mentioned by 3% or more are shown.
Owner/ Operator
General Manager (GM) or Office Manager
Chief Executive Officer (CEO) or President
Senior Manager or Manager
Managing Director, Senior Director or Director
Controller
Chief Financial Officer (CFO)
Bookkeeper
48%
19%
15%
6%
5%
5%
5%
3%
18-34
35 to 44
45 to 54
55 to 64
65+
10%
21%
27%
29%
13%
42%55+Title/ Role Age
Business & Agriculture
Male
67%
Female
33%40%
48%
12%
Sole decision-makerShares responsibilityInfluences decisions
Respondent Demographics
Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 303 respondents.
Role in Financial Decisions
Gender
ATB Business BeatEmail: [email protected]: atb.com/businessbeat
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