A growing number of Canadian entrepreneurs say they plan to invest more in 2021 than they did last year as the vaccine rollout, improving cash flow and a quick rebound in some sectors buoys optimism for the year ahead.
The findings of the Business Development Bank of Canada’s quarterly survey of 1,000 entrepreneurs released in a new report today are the most upbeat since the pandemic began.
Pierre Cleroux, chief economist of the Montreal-based bank, says the more positive results bode well for the country’s economic recovery.
He says investment intentions are improving, with technology emerging as the biggest focus of spending.
The bank’s survey found that the key reasons for investing in technology included improving processes to reduce costs, boosting a company’s online presence and investing in remote working.
Cleroux says while many entrepreneurs were wary about allowing employees to work from home before the pandemic, he says the last 10 months have shown it can benefit a business.
“The pandemic has changed the game,” he said. “It changed the perception of working from home.”
Cleroux said remote work can improve productivity, increase worker motivation and spur innovation.
“It can also reduce costs,” he said, noting that 18 percent of business owners surveyed by the bank said they plan to reduce their office space.
Despite an increase in COVID-19 cases across much of the country, Cleroux said the optimism uncovered by the survey is unlikely to change.
Businesses understand that once restrictions are lifted, the economy will rebound much faster than with other recessions, he said.
“This optimism we’re seeing will likely survive the second wave of the virus because we all believe the vaccine is going to improve drastically the situation of the economy,” Cleroux said.
Still, while business confidence has improved for the first time since the pandemic began, the study found that investment intentions compared to previous years are still relatively weak.
Across Canada, business investment intentions for the next 12 months are down three percent compared with last winter, for example, but have improved significantly from last spring’s rock bottom decrease of 32 percent, according to the bank’s report.
Investment intentions is the difference between negative and positive business sentiment.
Of note are the investment intentions of small- and medium-sized enterprises in Atlantic Canada and Quebec, which at one percent and four percent, respectively, are the only positive results on investment intentions in the survey.
Meanwhile, investment intentions in B.C. are down three per cent, Ontario came in at four percent lower, while the Prairie provinces were the lowest at a 13 percent decline.
The online survey of business owners was completed between Dec. 3 and Dec. 18, 2020. The poll measures the confidence of entrepreneurs in the economy, business and hiring outlooks, as well as investment plans over the next 12 months.
According to the polling industry’s generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.