SMEs Report Growth and Innovation

A new survey finds most SMEs have had sales increases over the past two years and expect a continued upswing

Written by Melissa Campeau

The past two years have been good for growth and innovation for many small and medium-sized enterprises, says the Survey on Financing and Growth of Small and Medium Enterprises. Conducted by Industry Canada, the survey compiled responses from 9,997 SMEs and found nearly two thirds reported an increase in sales over the 2009 to 2011 period. More than 4 in 10 (44%) saw their business grow between 1 and 10% per year, 11% grew between 11 and 20% and 8% were considered high-growth firms, growing more than 20% per year. Only 22% indicated their sales had not grown at all, while 16% experienced declining sales.

Most SMEs also remain positive about their future sales growth over the next three years. The majority (56%) expect their sales to grow either moderately (between 1% and 10%) or significantly (12% expect to grow between 11% and 20% and 8% expect to grow more than 20%). Only 18% of firms expect no growth, while 7% forecast a decline in sales.

The survey reports that SMEs were innovative over the two-year span. More than a third of businesses (38%) introduced at least one type of innovative activity between 2009 and 2011. Product innovation (24%) was the most common type, followed by marketing innovation (17%), organizational innovation (15%) and process innovation (15%). For many SMEs, introducing these innovations resulted in increased sales (70%) and increased market share (61%).

In addition, 16% of SMEs held some type of intellectual property protection. Non-disclosure agreements were the most common (9%), followed by trademarks (8%), trade secrets (4%), patents (2%) and industrial designs (1%).

The survey examined financing trends for SMEs as well. In 2011, 36% of SMEs requested some type of external financing, with 26% asking for debt, 7% leasing, 8% trade credit, 4% government financing and 2% requesting equity financing.

Chartered banks were the main suppliers of financing to SMEs in 2011, serving 55% of financing requests, followed by credit unions (16%), government institutions (7%), leasing companies (4%), family and friends (2%), venture capital funds or angel investors (1%) and foreign banks (0.4%).

According to the survey, 60% of SME owners as of 2011 were 50 years of age or older, 28% were between 40 and 49 and 12% were younger than 40. Most (66%) were male and—not surprising given the average age of an owner—77% report having more than 10 years of management experience.

Read the full summary of survey findings.

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