More than half (72%) of Canada’s small business owners aged 25 to 39 export goods and services, with many increasing their focus on international growth in the last five years, finds a poll by CIBC.
Further, 67% of those same business owners are concerned about trade uncertainty, with 65% worried changes to NAFTA could negatively impact their businesses.
While NAFTA’s outcome is still being negotiated, your business owner clients may not know that a deal between Canada and the EU eliminated 98% of tariffs between the two trade zones. That’s thanks to the Canada–European Union Comprehensive Economic and Trade Agreement (CETA), which came into effect September 21, 2017.
That’s good news for those who export to Europe. Of the 59% of all business owners who export, CIBC finds 31% export to Europe; 84% export to the U.S. and 16% to Latin America.
Here are additional findings.
- Of the 59% of small business owners who export: 72% of owners aged 25 to 39 years export, compared to 60% of those aged 40 to 59 and 37% of those aged 60+.
- 46% of those aged 25 to 39 have increased their focus on international growth in the past five years, compared to a third of those aged 40 to 59.
- 53% plan to increase their capital investment to grow or expand their business in the next year.
“Business owners typically wait until later in their growth cycle to expand abroad, but it’s happening far sooner with the rise of digital commerce and adoption of new technologies that create more cost-efficient growth opportunities,” says Andrew Turnbull, senior vice-president, Small Business Banking, CIBC. “That’s helped accelerate the pace of growth, particularly for younger entrepreneurs.”
This focus on international expansion is a positive trend, but it also creates challenges, he adds.
While too much competition (31%) was cited as the top challenge for all business owners, those under 40 are almost equally concerned about sources of future growth (25%), being able to respond quickly to changing market needs (25%), and fluctuating currencies (24%).
Among small business owners not exporting, 41% are comfortable with their current volume, growth and revenue, 21% haven’t considered it, and 16% worry the legal and regulatory requirements are too complicated.
Timer set for aging business owners
Among business owners aged 60+, 63% do not plan to grow nor expand their business in the next year, with 36% intending to either close, sell or transfer their businesses.
Yet, the poll found 78% of aging business owners do not have a formal or detailed plan in place for retirement or in the event of an unexpected emergency.
Winding down a business or transferring it to family or business partners can be complicated and fraught with tax consequences if not handled carefully, says Sean Foran, managing director, Business Transition Planning, CIBC Wealth Strategies Group.
“The biggest mistake small business owners make is not having these conversations early enough,” adds Foran. “It’s important to involve a team of experts including lawyers, accountants and financial advisors to achieve a higher valuation, maximize retirement income and reduce their overall tax bill.”
About the survey: From September 6 to September 15, an online survey was conducted among 1,014 randomly selected Canadian adults who are decision makers for a small business, and who are Angus Reid Forum or EMI Research Solutions panellists.