ATB BUSINESS BEAT:
The pulse on business in Alberta
Volume 3, October 2013
Who are the small and mid-sized business
owners in Alberta?
Thanks to Small Business Week, October is typically when we honour
and acknowledge the hard work and dedication it takes to run a
small or mid-sized business. In celebration of that, we thought for
this quarter’s edition of the ATB Business Beat, we’d examine the
composition of Alberta’s small and mid-sized enterprises (SMEs).
We know SMEs represent 99.9% of business in Alberta—only 0.1%
of all Alberta businesses have 500 employees or more—but what
else do we know about them? Who are they? What is the typical size,
industry, life-cycle phase, and years in operation for our province’s
SMEs? And what makes them tick? To find out, we examined Alberta
SME’s optimism about the economy, the future of their businesses and
growth plans. We also asked the more experienced entrepreneurs to
give some advice to those just starting out.
Finally, we all know about the extensive damage experienced by many
Southern Alberta communities during the June floods. But how did
that impact local SMEs? How many were effected, in what ways, and
how will they recover?
ALBERTA CHARACTER
Over the last three quarters, we surveyed over 900 SMEs. Of those surveyed,
nearly half (49%) are considered “micro” businesses, with fewer than five
employees, 41% are small with 5 to 49 employees and 10% mid-sized with
50 to 499 employees. In terms of annual revenue, half of those surveyed
reported revenues of $1 million or more in 2012.
Number of Employees
Annual Revenues 2012
We asked Alberta SMEs what they
love about having their own business.
The biggest response was around the
ability to make their own decisions
(47%) followed by having control over
the business (13%).
“
I like to be able to control
what happens in the
business. And with
owning a business you
have choices and freedoms,
and are in control of your
own destiny.
”
–Pharmacy owner
35 years in business,
$1–3M in revenue
WELL SEASONED
More than half of Alberta SMEs (61%) describe their operations as established or mature and 19% are in expansion-mode.
Only 3% are just starting out, but a further 9% are experiencing an initial growth surge. Less than one in 10 (8%) say they’re
starting to wind things down.
Business Life Stage
# of Years in Operation
Age
MEAN
25 years
35%
55+
Almost two-thirds (62%) of owner/operators are male.
Of those surveyed, 16% are in energy, oil and gas, 15% are in retail and 13% in construction. Half of SMEs in Alberta stretch
their operations beyond Alberta’s borders to other parts of Canada, 20% are in the US and 13% expand to international
markets. 54% of those we surveyed have a store front.
Business Location(s)
Business Scope
We asked business owners who’ve
been operating for five or more years
what tips they would offer to those just
starting out. Their advice:
› 16% said it’s all about people,
both employees and customers.
49% of
SMEs only
conduct
business in
Alberta
Almost half (47%) of SMEs report loans or debt outstanding.
› 36% less than $1M
› 5% $1–3M
› 4% $3–10M
› 2% $10M +
› 16% reminded new business owners to watch their cash flow.
› 15% said understanding the
market is key.
“
Manage your cash flow
because it’s your lifeline.
If you have no cash, then
your business is done
pretty quickly.
”
–CFO, Energy, Oil and Gas Company
10 years in business, $20M +
in revenues
THE FUTURE’S SO BRIGHT...
Optimism is strong in Alberta, and it’s growing this quarter with 87% of SMEs answering that they believe the Alberta
economy will be the same or better six months from now. (That’s an impressive increase of 10 percentage points over
last quarter.) When asked about their optimism concerning their own businesses, the response remains very high at 89%
(no change from last quarter).
Alberta Economy
Why the joy?
Your Company
There could be many factors as to why Alberta SMEs
remain the second most optimistic in the country (behind
Newfoundland and Labrador)1. These include:
• Rising energy prices2: As far as Canadian provinces go,
Alberta is one of the most dependent on selling its
exports to the rest of the world. While overall exports have
struggled in the last year, they took a strong turn for the
better in July. Export values rose to $9.1 billion, 17.3% greater
than June. Oil and natural gas exports steadily increased
and the price of oil rose, too.
(±) Change from last quarter
“
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
”
• Shoppers are opening their wallets3: Retailers are feeling
good about the overall health of the economy and that’s
backed by data showing Albertans consumers are speaking
loudly—and confidently—with their wallets, parting with
$6.1 billion in July.
• There are more people spending4: Alberta’s population
grew by over 42,000 residents over the second quarter,
bringing our total population to over four million for the first
time ever. Our 1.08% growth rate is three times the national
average (0.38%).
GROWTH REMAINS A PRIORITY
Three quarters of SMEs are intentionally trying to grow
their businesses and 57% are seeing positive results for their
efforts. A further 12% are growing in spite of themselves
(citing organic growth rather than growing with intentional
efforts). When asked where they plan to invest money,
almost six in 10 (59%) SME owners in Alberta plan on
purchasing new company assets in the next 24 months.
Hiring and retaining skilled employees remains by far
the biggest hurdle to achieving growth, as 47% of SMEs
identified that as their top or second barrier. Limited access
to capital or additional financing was second at 20%.
Ted Mallett. “Business Barometer®: Small Businesses less optimistic in September”. Canadian Federation of Independent Business, September 2013. 2Statistics Canada, The Daily, September 4, 2013.
Statistics Canada, The Daily, September 24, 2013. 4“Alberta’s Population Tops 4 Million!”. Quarterly Population Report, Second Quarter – 2013, Alberta Treasury Board & Finance, September 26, 2013.
1
3
Barriers to growth
HIGH WATER
The floods in Southern Alberta in June 2013 had a deep impact on the affected
communities that may be felt for years to come. Of the SMEs we talked to, more
than one in five (21%) said their business was somewhat or greatly impacted in
a negative way.
And of those impacted in a negative way, 40% experienced either a loss in
revenue or had paid out additional expenditures. This included things like being
shut down for a few days, reduced clientele, having to reduce or lay off staff, and
the need to purchase new equipment. A further 20% experienced water damage,
power outages or some kind of physical impact to their building or inventory.
“
There was no business
because tourists couldn’t
come here. The roads
were closed. People were
concerned that Canmore
was totally destroyed.
”
–Owner, Bed & Breakfast
18 years in operation, less than
$250k in revenue.
A LOOK FORWARD
Alberta SME owners are an optimistic, resilient breed. Of
those impacted by the flood, almost six in 10 (59%) feel they
will have fully recovered in six months time, 27% say they feel
six months from now they will have only partially recovered,
9% feel they will not have recovered and 5% just don’t know.
Is there a positive side to the flooding?
Of all the SMEs we surveyed, a whopping 96% said the
floods have not impacted their plans for growth at all.
Of the SMEs we surveyed, 10% say they were positively
impacted because of increased demand for services or
supplies they carry. In fact, the substantial expenditures
of reconstruction are expected to offset the temporary
disruptions adding 0.2 percentage points to the growth
of the 2013 Alberta economy5.
About this report
About NRG Research Group
For more information about this report or the next ATB
Business Beat, please email [email protected] or
visit atb.com/businessbeat to join the mailing list.
NRG Research Group helped us conduct our survey
of 300 Alberta SMEs. NRG Research Group
(www.nrgresearchgroup.com) is a leading Canadian
public affairs and market research company with
offices in Calgary, Vancouver, and Winnipeg.
About ATB Financial
ATB Financial (atb.com) is the largest Alberta-based
financial institution, with assets of $32 billion. ATB offers
retail financial services, business and agricultural financial
services, corporate financial services and investor
services to more than 635,000 Albertans and Albertabased businesses in 242 communities in our province.
ATB Business & Agriculture provides banking services to
Alberta’s small and mid-sized businesses, farmers and
other agriculture customers.
To find out how ATB Financial can help
your business grow, please contact:
Wellington Holbrook, Executive VicePresident, Business & Agriculture, ATB
Financial at [email protected].
Who did we talk to?
These findings are from an ATB Business telephone survey
conducted during August 22–September 4, with 300
randomly-selected Alberta SME owners and operators.
Study exclusions: agriculture (farms or ranches),
government, financial institutions and large businesses
(500+ employees).
Business size definitions:
small - 0 to 49 fulltime employees);
and medium-sized - 50 to 499 fulltime employees.
5
2013-14 First Quarter Fiscal Update and Economic Statement, Government of Alberta,
August 29, 2013.