Canada’s robust economy is encouraging entrepreneurs to invest more in 2018 to acquire businesses and make their companies more competitive, a new BDC survey of more than 4,000 Canadian business owners indicates.
Owners of small and medium-sized businesses plan to invest $140.5 billion in 2018, a 2.9% increase over what entrepreneurs spent in 2017. By far, the biggest increase in planned investments. Entrepreneurs intend to spend $18.9 billion on acquisitions this year, a 79% jump over what they spent in 2017. The upturn in acquisition plans was spread across all regions and sectors.
A good time to buy a business. Many baby-boom generation entrepreneurs will be exiting their businesses over the next five years. A pair of recent BDC studies—found, the next few years will be an excellent time for transactions. A year of exceptional growth. While worrisome at first glance, these declines follow a year of exceptionally strong economic growth. Entrepreneurs invested aggressively at the beginning of 2017 and scaled back their spending as the year progressed.
Larger business spend to automate. Another notable finding was spending plans to close to half of medium-sized businesses, those with 100 to 499 employees, plan to invest to increase automation in their operations. By comparison, only a quarter of small businesses, those with one to 99 employees, plan to make this kind of investment.
Entrepreneurs stick with traditional lenders. More than a quarter of businesses plan to finance their investments, mostly from a traditional financial institution, such as a Canadian chartered bank or a credit union. While one in 10 businesses in the technology intend to use alternative financing sources such as, crowdfunding or online lenders, the proportion drops to one in 50 for other types of businesses.
Article credit: bdc
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