62% of SMBs were positive about the future, although growth expectations for most were tempered, and views about data privacy raise some concerns.
Zoho has released the latest in its sequential Zoho Canada SMB Outlook Reports, following earlier ones from October, 2022, May, 2022, and October, 2021. The overall growth expectation numbers were relatively good, especially given the less than buoyant state of the economy, although there were some areas of concern, particularly around a lack of knowledge of companies’ own privacy policies. The survey was conducted in March, 2022, using Zoho Survey and Zoho Analytics. It surveyed 1,016 individuals across Canada, from managers to C-level roles.
62.1% of respondents expect to grow between 1% and 20+%, with Ontario the most optimistic at 63.8%, replacing Quebec in the top spot it had occupied in the previous survey in October.
That sounds pretty good, but even leaving out the impact of inflation, the more granular numbers aren’t as positive. This optimism includes 38.2% expecting growth of 1-10%, and 15.4% expecting growth of 10-20%, and 8.5% expecting 20+% growth. In addition, a high number – 31.2% – anticipate zero growth, while only 7.8%, a low number, expects to see a decline.
Still, the last report in October report indicated that 73% of respondents were optimistic about the future, meaning that number is down more than 10%. Nevertheless, Zoho sees the numbers as positive overall.
“We were expecting it to be a little more sombre than what it is,” said Chandrashekar LSP, Zoho Canada’s managing director. “With everything that’s going on with the economy, we were expecting more gloom than what we see here. Businesses have found a way to work around things like access to funding. Businesses are finding ways to swim against the tide.”
The number of jobs added has been high, even in the tech industry, which has seen huge layoffs in the U.S.
“What has been confounding experts is the number of jobs added, which is staggering,” LSP said. “34,000 jobs were added in March instead of 8000. The number of jobs added in Canada has been mindblowing. Even in the tech sector, Canada has not seen layoffs like in the U.S. except for Shopify late last year.” In contrast, the number of people looking to lay off is less than 4%.
The survey found that inflation is nearly twice the challenge as interest rates are for businesses. 42.3% of respondents said high inflation is the bigger challenge, while 21.7% said it was high interest rates, and 36% weren’t sure which was more of a challenge. 49.8% of respondents said that they had been impacted and 19.2% indicated no changes. Fewer respondents say inflation is impacting business versus the previous report’s 64.6 – not a surprise given that inflation has declined, albeit slightly, since then.
“I think a lot more is settled now with respect to interest rates,” LSP said. “People expected it would go down late last year, but nothing happened.”
In responding to the higher interest rates, 28.2% increased prices, 18.1% delayed capital expenses, and 10.6% delayed hiring. 43.1% of all respondents said rates didn’t impact their business. Inflation’s impact on offers for new hires was also limited with 34.6% saying it has affected offers, 24.8% saying it hasn’t, and 40.5% saying the question isn’t applicable.
As far as lessons learned from managing a business through the past 12 months, the top priority was increased staff pay and benefits, at 22.1%. That was followed by more aggressive pricing, at 20.6%, more flexible work models, at 20.5%. cost reductions, at 19% and increased efficiencies, at 17.8%. These data were consistent across provinces.
“A more flexible work model that lets companies keep their employees, and having a good set of solutions for enabling remote work is critical,” LSD stated.
The major technology priority was customer experience. It was by far the leading workflow automation priority, at 41.4%, followed by finance at 15%, custom applications, at 14%, and 7.8% on HR, with 21.1% unknown.
“These numbers are pretty stable from the October survey,” LSP indicated. “Customer experience is still the number one priority by far, and anything customer facing is supercritical. The collaborative workspace is joined at the hip with this.”
One set of data points, which seems good superficially, is actually fairly problematic, LSP said. Respondents were confident with how customer privacy is handled by their organization, with 53.8% saying yes and only 12.9% saying no. The issue, however, is that 33.3% didn’t know their business processes enough to have an informed answer. Alberta was by far the worst, with 44.5% not knowing, followed by Ontario at 34.5%.
“We highlighted that because the numbers are quite unnerving in a way,” LSP said. “You better have a knowledge of processes about what’s going on. If you don’t know what they are, you are looking for trouble. Data is far more precious than they realized before and compliance regulations are much stricter.”