Canada's small business owners are more confident than last year that their businesses will grow and the economic situation will improve, according to a recent BMO survey.
Sixty-two per cent of those who answered the semi-annual survey on business confidence said they expect 2014 will be a better year than 2013, and 55 per cent said they expect their business will grow. Only six per cent expect their business to shrink, and 10 per cent believe 2014 will be worse for business.
BMO uses the responses to the survey to calculate a business confidence index, which takes into account how a business is currently performing, whether business owners believe they will do better or worse next year and whether they expect their business to expand or shrink.
The index in the recent survey was 70, an increase of confidence from last fall, when it was 63, and this past spring, when it was 59.
B.C. and Alberta business owners were the most confident when measured by the index results, scoring 74 and 73, respectively, but all regions were generally confident about their prospects, with the lowest index score being in the Atlantic region at 68.
31% plan to invest
Sixty-six per cent of small business owners in B.C. say they believe 2014 will be better for business compared to 59 per cent in the Atlantic region, where 16 per cent of respondents thought 2014 would be worse for business. Ontario entrepreneurs also had a strongly positive outlook, with 65 per cent saying 2014 will be better.
"Particularly noteworthy is the fact that the outlook for business next year is consistent across the country, so entrepreneurs are feeling supported and encouraged regardless of where they're located," said Steve Murphy, senior vice-president of commercial Banking at BMO Bank of Montreal, in a news release.
Nearly a third (31 per cent) of small business owners in Canada planned to invest more in 2014 than they did in 2013, with Alberta having the greatest proportion of those who planned to spend more. Forty per cent of small business owners in that province said they will be investing more in 2014 compared to 24 per cent in Quebec and 31 per cent in the Atlantic region.
Most (76 per cent) of the entrepreneurs who said they will be investing in their business in 2014 said they will put the money toward upgrading equipment while 46 per cent said they would invest in hiring more employees; 45 per cent said they would upgrade technology; and 45 per cent they would invest in employee training.
"The positive outlook among businesses for 2014 is consistent with our forecast for accelerating growth as we move into next year," said Benjamin Reitzes, senior economist at BMO Capital Markets, in a press release. "An improving U.S. and global economic backdrop is expected to provide a lift to Canadian businesses and the economy as a whole."
The survey is based on telephone interviews with 301 Canadian business owners, conducted between Aug. 22 and Sept.10 and has a margin of error of plus or minus 5.6 per cent, 19 times out of 20.