Alberta Business Beat
Volume 3, September/October 2013
INTERNAL with
notes
1
Background and Methodology
2
Background & Objectives
Background
• ATB Financial commissioned NRG Research Group to conduct a survey of 300 randomly
selected small- to medium-sized businesses in Alberta each quarter, beginning in Q2FY2014.
• The purpose of the study is to gain an understanding the challenges faced by small- to
medium-sized businesses in Alberta, and to track confidence in the business climate in
Alberta.
Research Objectives
» Measure business owners and managers’ perceptions of the current business
climate compared with six months ago, as well as their assessments of what the
business climate will be like six months from now;
» Understand the impact of the June flooding for small to medium-sized businesses;
» Gauge the likelihood of their company’s future investment plans;
» Determine best advice for a start-up to succeed; and,
» Uncover the barriers for growth for small-sized businesses; and,
» Profile the firmographics as well as respondent demographics for small- to mediumsized businesses in Alberta.
Business & Agriculture
3
Methodology
Qualifying
Businesses
< 500 employees
<$20 million
annual revenues
Must be financial
decision makers or
influencers
•Excluded agriculture,
government, financial
institutions, media,
market research, PR,
advertising and
communications
sectors
• Randomly selected
Alberta SME’s
Field dates:
Aug 22 – Sept 4,
2013
Telephone + online
option
• Over 3,000
businesses contacts
made and 300
completed the
survey
• Margin of error is
+/- 5.8%
Business & Agriculture
4
Key Insights
1
Best advice for start-ups is to focus on
getting ‘the basics’ right
2
Expectations for the Alberta economy are
just taking off
3
Recovery from the flood continues, but
growth plans were not affected
Business & Agriculture
5
Alberta Small Business Profile 2013
6
Half of Alberta SMEs earn revenues in
excess of $1,000,000
Of the SMEs we surveyed, half (49%) report fewer than five employees and
half (49%) report 2012 earnings in excess of $1,000,000.
Number of Employees
Annual Revenues 2012
10%
13%
0 to 4 'Micro'
5 to 49 'Small'
49%
50 to 499 'Med'
23%
< $250k
$250-500k
17%
$500k-<$1MM
41%
14%
20%
14%
$1-<$3MM
$3-<$10MM
$10MM+
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
7
72% of SMEs are
TRYING to grow
their business
Business Firmographics
Business Life Stage
Phase
Start-up
Initial Growth
3%
Intentional Growth
52%
9%
46%
Established
Expansion
19%
Mature
Winding Down
Intentional
Growth
Organic Growth
14%
No Growth, but
Trying
20%
15%
8%
No Growth, NOT
Trying
14%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
8
Business Firmographics
# of Years in Operation
Borrowing Needs
No borrowing
needs
48%
Less than $1MM
$1 to < $3MM
$3 to < $10MM
$10MM+
Don't
know/Refused
36%
Up to 5 years
11%
6 to 10 years
16%
$1MM
+
11 to 15 years
16%
11%
16 to 20 years
MEAN
25 years
5%
4%
2%
6%
12%
Over 20 years
45%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
9
Business Firmographics
8% of SMEs
are franchises
Industry
Energy/ Oil & Gas
Retail Trade
15%
Construction
Health & Social Asst
Hospitality/ Restaurant
Franchise Industry
16%
13%
7%
6%
Retail
30%
Automotive
17%
Food Services
9%
Health
7%
Transp/ Warehouse
4%
Non-profit
7%
Prof, Sci & Tech
4%
6%
Education
4%
Travel, Leisure &
Accommodation
Beauty & Fitness
4%
Energy/ Oil & Gas Services
4%
Financial Services/ Insurance
3%
Manufacturing
3%
Arts, Entertain & Rec
3%
Business Srvs: Legal/Accting
3%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents, responses of 3% or more are shown. 10
49% of SMEs
only conduct
business in
Alberta
Business Firmographics
Business
Location(s)
Business Scope
Within Alberta
30%
46%
24%
98%
In other parts of
Canada
In the US
50%
20%
Urban area(s) only
Both urban and rural areas
Rural area(s) only
In international markets
outside of Canada or
the US
13%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
11
Business Firmographics
Does your business have a store front?*
Yes
54%
No
Don't know
43%
3%
* asked only in Aug-Sept
2013
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug-Sept 2013, with 300 respondents.
12
Respondent Demographics
Age
Title/ Role
45%
Owner/ Operator
General Manager (GM) or
Office Manager
12%
35 to 44
20%
14%
Senior Manager or Manager
6%
Managing Director, Senior
Director or Director
6%
Chief Financial Officer
(CFO)
18-34
55+
20%
Chief Executive Officer
(CEO) or President
Controller
35%
4%
45 to 54
32%
55 to 64
65+
26%
9%
3%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents, responses of 3% or more are shown. 13
Respondent Demographics
Role in Financial
Decisions
Gender
14%
38%
Female
38%
Male
62%
48%
Sole decision-maker
Shares responsibility
Influences decisions
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
14
Best Advice for Start-up Success
15
Best advice for start-up success from
established businesses
Focus on employees & client satisfaction
Keep cash flowing/ watch cash flow carefully
Research the marketplace
Keep expenses low/ no dept
Hire and maintain good staff
Don't grow too quickly/ start small
Work hard
Don't give up/ be positive
Set realistic expectation
Surround yourself with good people in your network
Design a sound business plan (and stick with it)
Find your niche in a sizeable market
Focus on marketing/ advertising
Be honest
Have good quality products
Offer something unique with yor product or service
Keep up to date with technology/ adapt to the times
Manage inventory and records well
Don’t rely on the government
16%
16%
15%
11%
10%
10%
8%
6%
6%
6%
5%
4%
3%
3%
3%
3%
3%
3%
3%
“MANAGE CASH FLOW,
BECAUSE IT'S YOUR
LIFELINE. IF YOU HAVE NO
CASH THEN YOUR BUSINESS
IS DONE PRETTY QUICKLY.
”
CFO, Energy/Oil & Gas Company,
10 years in business,
$20MM+ in revenues.
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, responses mentioned by 3% or more
16
Reasons for Becoming an Entrepreneur
17
What I love about owning/ running/ being
responsible for an independent business
is…
47% of SME owner/operators report … The ability to
make my own decisions
13% Control over own business
12% Flexibility of hours
“I LIKE TO BE ABLE TO CONTROL WHAT HAPPENS IN
THE BUSINESS AND WITH OWNING A BUSINESS YOU
HAVE SOME CHOICES AND FREEDOMS AND ARE IN
CONTROL OF YOUR OWN DESTINY.
Pharmacy Owner
Business & Agriculture
35 years in business,
$1MM - $3MM in revenue.
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 98 respondents.
”
18
Barriers for Growth of Small-Sized Business
19
Uncovering the greatest barriers to grow for
small-sized businesses
Biggest Challenge
2nd Most Difficult
Difficulty hiring or retaining employees
28%
Limited access to capital or additional financing
12%
Facing tough competition
7%
Inadequate cash flow or poor cash flow management
6%
7%
The need for regulatory compliance or Gov't regulations
7%
4% 11%
17%
13%
Poor sales or weak market conditions
5% 5% 10%
Difficulty finding capable management
3
Cost of labour
47%
20%
8%
10%
6%
19%
9%
4% 4% 8%
Overhead costs (rent/utilities)
4% 2 6%
Limited in-house marketing expertise
3 3 6%
Customer acquisition/ retention 1 5% 6%
Limited product/service differentiation from competitors
3 1 4%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, total responses mentioned by 4% or more
20
Impact of the June 2013 flood
21
The impact from the flood was far reaching
21%
say their business was negatively impacted by
this event (‘greatly/somewhat’)
Greatly impacted (negatively)
Somewhat negatively
impacted
4%
17%
Not impacted
Positively impacted
69%
10%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents.
22
This is the slide that contradicts the economy optimism growth.
Potentially a leading question to be removed from the deck.
Expected future impact on the Alberta
economy is considerable
%
60
…anticipate the flooding will still be impacting the
Alberta economy six months from now.
2%
25%
17%
Significant negative impact
Some negative impact
No impact
Positive impact
13%
43%
Don't know
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents.
23
Those negatively impacted felt the greatest
effect on their revenues
“HOW WAS YOUR BUSINESS NEGATIVELY IMPACTED?”
Revenues
34%
Physically impacted
20%
Operationally impacted
Indirect economic impact
Expenditures
16%
10%
Among the 21% of
businesses who
were negatively
impacted, 40%
experienced either
a loss in revenue
or had additional
expenditures.
6%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013; among those negatively impacted; 64
24
The majority of SMEs negatively impacted
expect to fully recover within six months
“IN SIX MONTHS’ TIME, DO YOU FEEL YOUR BUSINESS WILL…?”
Fully recover
59%
Partially recover
No recovery yet
Don't know
27%
9%
5%
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013; among those negatively impacted; 64
25
FLOOD NEGATIVELY IMPACTED BUSINESS
“There was no business because tourists couldn’t come
here. The roads were closed. People where concerned
that Canmore was totally destroyed.
FLOOD POSITIVELY IMPACTED BUSINESS
Owner, Bed & Breakfast,
18 years in operation,
Less than $250k in revenue.
”
“We had massive loads of appliances going to High River
and Calgary for replacement of damaged ones.
”
General Manager, Family Trucking Business,
30 years in operation,
$1MM to $3MM in revenue.
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013; among those negatively (n=64) or positively impacted
26
Business Confidence
27
“HOW DO YOU THINK…
WILL BE SIX MONTHS
FROM NOW?”
A very optimistic future
Your Company
Alberta
Economy
87%
89%
+10
n/c
will be better off or the
same
will be better off or the
same
(±) Change from last quarter
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents.
28
Introducing the ATB Business Beat Optimism
Indicators
Retail +17.7
ATB Business Beat Optimism and CFIB Business Barometer
Index
(0-100)
Indices
Energy +4.4
Construction -13.1
75
70.2
69.8
69.8
70
70.5
65
69.5
68.8
66.2
60
59.8
55
55.4
More optimistic about
future performance
50
ATB - Business
Optimism Index
CFIB - Business
Barometer Index
ATB - Economy
Optimism Index
Less optimistic about
future performance
45
40
Q1 2013
Q2 2013
Q3 2013
Data time periods: Q1 = Jan 2013, Q2 = May 2013 & Q3 = Aug 2013
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs 2013; CFIB Business Barometer Index 2013.
29
Shoppers show confidence in July
Business & Agriculture
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 24, 2013
30
Oil sends sales soaring
Business & Agriculture
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 4, 2013
31
(Fewer) pretty pink houses for you and me
Business & Agriculture
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 10, 2013
32
Independent businesses feeling the joy
Business & Agriculture
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 10, 2013
33
Business Growth
34
Intentional growth is paying off
96% have not changed
their investment plans
because of the flood
75% of SMEs are
intentionally trying to
grow their business.
57% are seeing growth
in their business as a
result of their efforts.
12% are
experiencing ‘organic’
growth.
Business & Agriculture
OVER THE NEXT 24
MONTHS, DO YOU HAVE ANY
PLANS TO…? “% YES”
Purchase equipment/machinery
59%
Invest in new IT
36%
Expand in domestic markets
34%
Commercialize new products or
services
25%
Invest in R&D
18%
Purchase/build commercial real
estate
17%
Purchase another company
8%
Downsize your operations and sell
assets
7%
Expand in foreign markets
7%
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept2013, 300 respondents.
35
Alberta Advantage
36
I believe the Alberta advantage is…
18% of SME owner/operators report the rich and
diverse economy
13% The oil industry
10% Lots of job opportunities
“THE STABILITY OF THE LONG TERM ECONOMIC FACTORS
AROUND THE PROVINCE. WE HAVE NEVER REALLY HAD A LONG
TERM DOWNTURN IN OUR ECONOMY, SO WE HAVE ALWAYS
MANAGED TO PULL
OUT
OF IT QUICKLY
AND COME OUT ON TOP.
Owner,
Construction
Company,
Business & Agriculture
37 years in business,
Less than $250k in revenue.
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 97 respondents.
”
37
What keeps me in Alberta is…
24% of SME owner/operators report … It is my home
14% The business opportunities
13% My family is here
“I WAS BORN AND RAISED HERE. I'M PROUD TO BE AN ALBERTAN.
WE HAVE A STRONG ECONOMY AND IT'S THE BEST PLACE IN THE
WORLD TO LIVE.
General Manager, Retail Business,
57 years in business,
Undisclosed revenue.
”
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 99 respondents.
38
APPENDIX: Volume 3 - Firmographics and
Respondent Demographics
39
Half of Alberta SMEs earn revenues in
excess of $1,00,000
Of the SMEs we surveyed, nearly half
report fewer than five employees, half
(53%) report earnings in excess of
$1,000,000 in 2012.
Annual Revenues 2012
14%
Number of Employees
25%
$250-500k
14%
0 to 4 'Micro'
47%
39%
< $250k
$500k-<$1MM
20%
5 to 49 'Small'
12%
50 to 499 'Med'
19%
11%
$1-<$3MM
$3-<$10MM
$10MM+
Change from last quarter
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300
40
75% of SMEs are
TRYING to grow
their business
Business Firmographics
Business Life Stage
Phase
Start-up
2%
Initial Growth
Intentional Growth
57%
11%
46%
Established
Expansion
22%
Mature
Winding Down
Intentional
Growth
Organic Growth
No Growth, but
Trying
12%
18%
11%
7%
No Growth, NOT
Trying
13%
Change from last quarter
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300
41
Business Firmographics
# of Years in Operation
Borrowing Needs
No borrowing
needs
48%
Less than $1MM
$1 to < $3MM
$3 to < $10MM
$10MM+
Don't
know/Refused
Business & Agriculture
37%
Less than 5 years
12%
6 to 10 years
16%
$1MM
+
11 to 15 years
15%
10%
16 to 20 years
MEAN
24 years
6%
2%
2%
5%
Over 20 years
10%
47%
Change from last quarter
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300
42
Business Firmographics
7% of SMEs
are franchises
Industry
Retail Trade
18%
Construction
15%
Energy/ Oil & Gas
12%
Hospitality/ Restaurant
5%
Health & Social Asst
5%
Prof, Sci & Tech
4%
Transp/ Warehouse
4%
Arts, Entertain & Rec
4%
Education
4%
Manufacturing
4%
Business & Agriculture
Franchise Industry (n=20)
Retail
9
Non-profit
3
Automotive
2
Food Services
2
Health
1
Business Services
1
Other
2
Change from last quarter
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents, responses mentioned by 4% or more are 43
Business Firmographics
Start-ups: what made you choose this industry?
2% of SMEs surveyed considered
themselves in the start-up stage of their
business life cycle
“It’s something I like to do”
“I know a lot about it”
“Financial stability”
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 7 respondents.
44
49% of SMEs
only conduct
business in
Alberta
Business Firmographics
Business
Location(s)
Business Scope
Within Alberta
22%
43%
98%
In other parts of
Canada
50%
34%
In the US
20%
Urban area(s) only
Both urban and rural areas
Rural area(s) only
Business & Agriculture
In international markets
outside of Canada or
the US
13%
Change from last quarter
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
45
Business Firmographics
Does your business have a store front?*
Yes
54%
No
Don't know
43%
3%
* New question this quarter
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
46
Respondent Demographics
34%
Age
Title/ Role
46%
Owner/ Operator
General Manager (GM) or
Office Manager
Chief Executive Officer
(CEO) or President
55+
18-34
16%
19%
10%
Managing Director, Senior
Director or Director
6%
Senior Manager or Manager
6%
35 to 44
18%
45 to 54
Chief Financial Officer
(CFO)
3%
Controller
3%
Vice President
3%
Administrator
3%
32%
55 to 64
65+
27%
7%
Change from last quarter
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents, responses mentioned by 3% or more are 47
Respondent Demographics
Role in Financial
Decisions
Gender
15%
39%
Female
36%
64%
46%
Sole decision-maker
Shares responsibility
Influences decisions
Male
Change from last quarter
Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
48
Wellington Holbrook
Executive Vice President
ATB Business & Agriculture
atb.com/Businessbeat
[email protected]
49