Report: small outfits should look to the Internet to grow

A recent CIBC World Markets report expounds that for small businesses in Canada to find success, they must embrace technology. And, it is the Internet specifically that could fuel the sector’s rise.

One of the primary reasons the study targeted the small business sector in Canada was because it is seen as a growing market, coupled with the fact that the sector was not as affected by the recent slowdown in the economy. Recent history shows that in past downturns, small businesses in Canada were severely hit. For the purposes of this particular report, a small business was defined as an organization will less than 50 employees.

The province of Alberta outpaced Ontario as the fastest growing in the small business market, while Atlantic Canada was seen as weak. By city, Calgary led the way behind Oshawa, Ont., Edmonton, Toronto and Ottawa.

While small businesses continue to lag behind the medium- to large-scale enterprise in adopting technology – mainly because technology is still viewed mainly as a luxury as opposed to a business tool – there may be an equalizer than could change that.

“Until now small businesses have been complaining that they cannot compete with the economies of scale of large companies in terms of marketing and market research. The Internet definitely makes it much easier for them to market themselves and get into niche markets,” said Benjamin Tal, senior economist at CIBC World Markets in Toronto.

Technology will encourage small businesses to consider foreign suppliers and markets for their products. Currently, Tal estimated only 20 per cent of small businesses in Canada export their products.

Yet, with growth comes complexity. For smaller outfits that are considering moving products or services online and therefore internationally, some things to consider include foreign exchange, trade and tax issues and regulations of the foreign country.

For smaller companies to succeed both within Canada and on the international stage, Tal argued the key is to find a niche market because it avoids going head to head with a larger organization while opening up a market for themselves.

The small business market in Canada is expected to continue growing for nearly the next decade, which could be a benefit for larger enterprises.

“Large companies focus on small businesses as a strategic way of growing their business. And because it looks like the small business market will continue to grow it just makes sense to be in that market,” he said.

For a complete view of the study, visit CIBC World Markets at