BDC ViewPoints study Internationalization / entrepreneurial profile

Transcription

1 BDC ViewPoints study profile May 2011 Market Intelligence (Marketing) at BDC

2 Executive summary: Internationalization profile Particularly among wholesalers (91%) and in Ontario (63%) Importing: 33% Particularly among wholesalers (76%), manufacturers (51%) and retailers (39%) Imports represent 28% of total expenses, on average Exporting: 28% Particularly among manufacturers (49%) larger businesses (46%), and in Quebec (35%) On average, exports generate 30% of total revenues International activities: 56% Foreign alliances and partnerships: 21% Particularly among wholesalers (43%) No international activities: 44% Direct investment outside : 7% The main reason these entrepreneurs are not active at the international level is that they feel such initiatives are not applicable to their current business model That said, a majority believe that international activities could be beneficial to their business Are part of a global supply chain: 39% (as either a purchaser [22%] and/or supplier [23%]) Believe that increasing their international activities would be beneficial to their business: 80% The United States (84%), Asia (35%) and Western Europe (33%) remain the hot spots for international activity among Canadian entrepreneurs 2

3 Executive summary: Business needs Entrepreneurs who believe that starting or increasing international activity would be beneficial to their business Already active at the international level Not active at the international level yet 86% of them have people on their team with foreign experience (mostly top management) 41% of them already have people on their team with foreign experience Most (67%) intend to explore the feasibility of increasing their international efforts internally. About one in six (16%) would like to get external advice for free, and one in ten (10%) would be willing to pay for external consulting services. A minority (35%) intend to explore the feasibility of increasing their international efforts internally; a similar proportion (36%) do not yet know what they intend to do. A quarter would like to get advice for free and only 12% would pay to get advice. Top three aspects entrepreneurs need advice about: 1) Finding reliable partners (73%) 2) Identifying good business opportunities outside (68%) 3) Obtaining financing (67%) 3

4 Executive summary: Entrepreneurial environment Market Intelligence (Marketing) at BDC Top Challenges Carrying out sales and marketing initiatives (40%) Managing finances and cash flows (39%) Obtaining financing (38%) Handling time constraints on owner (37%) Dealing with reduced profit margins (34%) Top Strategies Develop new products or services (46%) Purchase equipment (31%) Increase the number of or training (30%) Increase production (29%) Create a marketing plan (26%) Target Growth for Next Fiscal Year Less than 0% (2%) Between 0% and 4.9% (16%) Between 5% and 9.9% (27%) Between 10% and 14.9% (19%) Between 15% and 19.9% (12%) 20% or more (25%) Hiring Targets for Next 12 Months 10 or more (7%) Five to nine (7%) Three or four (17%) One or two (51%) None (18%) Entrepreneurial View I constantly develop new products or services (53%) I develop new products or services only when necessary (occasionally) (25%) I am comfortable with selling just one or a few products or services, and improving them so that they sell well (23%) Organizational Structure The company has an official management structure (68%) The company has an advisory board (22%) 4

5 Context and methodology 5

6 Context and methodology > In the context of the current economic recovery, many Canadian firms could benefit from activities outside their natural geographic borders. BDC is interested in helping Canadian entrepreneurs develop internationalization projects that consist of four different initiatives in foreign markets: importing exporting alliances and partnerships foreign direct investment > By getting a better understanding of where Canadian businesses stand, BDC hopes to better help entrepreneurs reach their goals. > The second part of this report deals with challenges, strategies, organizational structure and entrepreneurial attitudes toward growth. > BDC ed 2,063 invitations to complete the survey to members of the BDC ViewPoints panel, as at April 26, The survey was available online between April 26 and May 12. A total of 574 entrepreneurs completed the survey, for a completion rate of 28%. > The responses from entrepreneurs were weighted according to region and company size to obtain results representative of the Canadian small and medium enterprise (SME) population. The BDC Market Intelligence team analyzed the final results. 6

7 Detailed results 7

8 Internationalization of Canadian SMEs 8

9 International initiatives Over half of the entrepreneurs surveyed claimed to be active at the international level* > Overall, 56% of respondents claimed that at least one of the international activities mentioned are part of their current business activities. What internationalization initiatives have you already included in your company s operations? Multiple answers allowed. (n=574) Importing 33% A statistically greater percentage of wholesalers (91%) and respondents from Ontario (63%) said that they either import, export, have partnerships in foreign markets or invest in foreign markets, or carry out a combination of these activities. > One third of entrepreneurs (33%) currently import certain products or services. Exporting Foreign alliances and partnerships 21% 28% This is the case for a statistically greater proportion of wholesalers (76%), manufacturers (51%) and retailers with fewer than 20 (39%). Direct investment outside 7% > Just over one quarter of respondents (28%) said they export. This ratio climbs to 49% among manufacturers, 46% among businesses with 50 or more, and 35% among respondents from Quebec. > One in five respondents (21%) mentioned that they have foreign alliances or partnerships. It is no surprise to see that a greater percentage of wholesalers (43%) had such alliances. > Very few companies currently have foreign direct investments (7%). None of the above 44% Base: All respondents. Multiple mentions allowed; therefore, total exceeds 100%. *This proportion seems slightly high. It could be explained by three factors: 1) the topic of the survey was mentioned in the invitation, so those who did not feel involved may have decided not to respond; 2) in this survey, the proportion of manufacturers is higher than usual as, by definition, they are more active than most other sectors at the international level; and 3) we included importing in our definition of internationalization, whereas statistics often present activities related primarily to exporting. 9

10 Reasons for lack of international initiatives Market Intelligence (Marketing) at BDC The main reason entrepreneurs are not active at the international level is that they feel such initiatives are not applicable to their current business model > Over half of respondents (52%) said the four international initiatives previously mentioned are not applicable to their business model. > Just over one quarter of entrepreneurs (27%) said that the size of their company does not warrant pursuing international initiatives. Unsurprisingly, this tends to be especially true among smaller businesses those that employ fewer than five workers (35%). > Slightly over one in ten businesses (11%) have not yet found the resources to help them start these kinds of initiatives. > Financing is an issue for 9% of respondents; one in ten entrepreneurs (9%) perceive these international initiatives as being too complicated; and a similar percentage (8%) are content with their current market and do not want to change anything. > Among other reasons for avoiding international initiatives, several entrepreneurs mentioned having time constraints, a few said they did not want to overstretch their resources, and others said that licensing and regulations made international initiatives prohibitive. However, several entrepreneurs claimed they are considering undertaking some of these international initiatives in the near future. What is/are the reason(s) you have not included any internationalization initiatives in your company s operations to date? Multiple answers allowed. (n=245) Not applicable to our business model The size of my company does not warrant it I have not found resources to help me start these kinds of initiatives I have not found financing to start these kinds of initiatives I think it is all too complicated I am happy with our current market, I do not want to change anything Other 8% 7% 11% 9% 9% 27% 52% I don't know / Prefer not to answer 2% Base: Entrepreneurs who do not currently have any international activities. Multiple mentions allowed; therefore, total exceeds 100%. 10

11 Could benefit from international activities Nearly three out of five entrepreneurs claim that international activities could be beneficial to their business > Of entrepreneurs who are not currently active at the international level but who could carry out the initiatives, 58% said that pursuing international efforts could be beneficial. > One in four respondents (26%) mentioned that, in their opinion, these kinds of international initiatives would not be beneficial to them. > Finally, 16% of respondents said they did not know if such initiatives would have a positive impact or simply preferred not to answer. Do you think your company could benefit from internationalization, i.e., importing, exporting, creating alliances or investing outside? (n=108) Yes, 58% I don't know / Prefer not to answer, 16% No, 26% Base: Entrepreneurs who do not currently have any international activities but for whom international activities could be applicable 11

12 Imports and exports What percentage of your company s expenses (all expenses combined) does importing products or services account for? Enter a number between 1 and 100. (n=195) What percentage of your company s revenues and sales (all revenues and sales combined) comes from exporting? Enter a number between 1 and 100. (n=180) 1% - 10% 38% 1% - 20% 54% 11% - 20% 21% - 30% 31% - 40% 14% 15% 10% 21% - 40% 41% - 60% 16% 7% 41% - 50% 6% 61% - 80% 8% 51% - 60% More than 60% 6% 13% 81% - 100% 14% Base: Entrepreneurs who currently import. Base: Entrepreneurs who currently export. On average, respondents who currently import claimed that import expenses represent 28% of their total expenses > Although import expenses represent, on average, 28% of total expenses, the majority of respondents (38%) said that they account for 10% or less of combined expenses. > In sum, import expenses account for 30% of expenses or less in two thirds of the cases (67%). Respondents who currently export asserted that their exporting activities generate, on average, 30% of their total revenues > For over half of those surveyed (54%), exports account for 20% or less of total revenue. 12

13 Global supply chain Two out of five respondents who are active at the international level said their company is part of a global supply chain > Nearly one quarter of entrepreneurs surveyed (23%) confirmed that their company is part of a global supply chain as a supplier. > A nearly identical proportion (22%) are part of a global supply chain as a customer or purchaser. > In sum, 39% of respondents are part of a global supply chain (some are both suppliers and customers). > Conversely, three out of five entrepreneurs (59%) said they are not involved in a global supply chain. This ratio increases to 75% among respondents from Quebec. Is your company part of a global supply chain? In other words, are you a supplier or purchaser of products or services that are part of a process involving a number of companies, at least one of which is located outside? (n=329) Yes, we are part of a global supply chain as a supplier Yes, we are part of a global supply chain as a customer / purchaser 23% 22% No, we are not part of a global supply chain 59% I don t know / Prefer not to answer 2% Base: Entrepreneurs who are active in at least one international activity. 13

14 Increased international initiatives A great majority of entrepreneurs currently active at the international level claimed that increasing their initiatives would be beneficial to their business > Most entrepreneurs (80%) already active on the international stage claimed that increasing their international initiatives would be beneficial to their company. > Interestingly, one in ten respondents (11%) do not think that pursuing further international initiatives would positively affect their business. > One in ten entrepreneurs (9%) said they are not sure whether increasing international initiatives would be beneficial or simply preferred not to answer. Do you think that increasing your internationalization efforts would benefit your company? (n=329) Yes, 80% I don't know / Prefer not to answer, 9% No, 11% Base: Entrepreneurs who are active in at least one international activity. 14

15 Increasing internationalization initiatives Regardless of whether or not entrepreneurs are active at the international level, making foreign alliances or partnerships is perceived to be the most beneficial initiative > Overall, nearly three out of five respondents (57%) claimed that making foreign alliances and partnerships would be among the two most beneficial initiatives they could pursue. > Two out of five entrepreneurs (42%) said exporting would be beneficial. Exporting was mentioned by a statistically greater proportion of manufacturers (72%) and respondents from Quebec (59%). > Importing would be an avenue to further develop, according to 30% of respondents. A significantly greater percentage of entrepreneurs already active at the international level (33%) believe this. > One in ten entrepreneurs (9%) said that foreign direct investment would likely yield positive results. > When asked to evaluate their desire and determination to increase their internationalization efforts, 44% of entrepreneurs currently active on the international scene or for whom international initiatives would be relevant said they are determined to do so. Generally speaking, desire and determination tend to be greater among entrepreneurs already active at the international level. Compared with other respondents, a significantly higher percentage of entrepreneurs in Quebec (60%) said they are determined to pursue international opportunities. Of the following four internationalization initiatives, which are or would be the most beneficial for your company? Up to two answers allowed. (n=394) Foreign alliances and partnerships Exporting Importing Direct investment outside I don't know / Prefer not to answer Don't know / Prefer not to answer Base: Entrepreneurs. 9% 4% 30% 42% 57% On a scale of 1 to 10, where 1 means not at all and 10 means very much, how much do you want and are determined to increase your internationalization efforts in the next 24 months? (n=394) Determined (7-10) Hesitant (5-6) Not very determined (1-4) 2% 25% 29% 44% Base: Entrepreneurs who are active at the international level or for whom that would be possible. When multiple mentions were allowed, total exceeds 100%. 15

16 Most beneficial regions of the world The United States, Asia and Western Europe remain the hot spots for international activities among Canadian entrepreneurs > As s most important economic trading partner, the United States remains the destination of choice for international initiatives. Overall, 84% of respondents would focus their energy on our southern neighbour. > A lot has been said and written about expanding in Asia and Western Europe. It seems that one third of respondents would agree and believe that these two regions are fertile for international development. > All other regions were selected by one in five respondents or fewer. > There are a few statistical differences worth noting: A significantly greater percentage of entrepreneurs from Quebec would channel some of their initiatives toward Eastern Europe (26%). A greater proportion of companies with between 20 and 49 said that South America (36%) and North Africa (13%) offer interesting opportunities. Which regions are or would be particularly good for your internationalization initiatives, all initiatives combined (importing, exporting, alliances or investment)? You can select as many answers as you wish. (n=394) AMERICA United States: 84% Mexico: 19% Central America: 11% South America: 21% Caribbean: 13% AFRICA North Africa: 4% Central Africa: 5% South Africa: 5% Middle East: 12% EUROPE Western Europe: 33% Eastern Europe: 14% Scandinavia: 13% ASIA: 35% OCEANIA: 15% DON T KNOW / PREFER NOT TO ANSWER: 2% Base: Entrepreneurs who are active at the international level or for whom it would be possible. Multiple mentions allowed; therefore, total exceeds 100%. 16

17 International readiness Among the nine important attributes for successful internationalization, entrepreneurs rated themselves more favourably in terms of confidence, innovation and engagement > Generally speaking, entrepreneurs currently active on the international scene tend to give their company higher rates compared with those who wish or plan to expand internationally. > Entrepreneurs are usually quite optimistic. Their confidence regarding the successful outcome of their international initiatives scores the highest among all attributes measured (average score of 6.6 out of 10; 57% allocated a score of 7 or more to this attribute). > Over half of entrepreneurs (53%) surveyed allocated a score of 7 or more when assessing their company in terms of innovation. > Engagement completes the top three attributes in the self-assessment (average score of 6.6 out of 10). > Entrepreneurs seem to acknowledge there is room for improvement in terms of their competitiveness (6.5 out of 10), their business plan (6.2 out of 10) and their knowledge of the regions targeted by internationalization efforts (6.2 out of 10). The following aspects are necessary for a successful internationalization initiative. How would you rate your company on these aspects on a scale of 1 to 10? (n=394) Average score % of 7-10 % of 5-6 % of 1-4 Don t know Confidence: degree of optimism about the success of the initiative Innovation: the company emphasizes innovation every day, develops innovative products / services, etc. Engagement: on the part of the management team and involved Competitiveness: large market shares, good reputation, unique product, etc. Business plan: internationalization is a good fit with the company s plans Knowledge of the regions targeted by internationalization: team members knowledge, previous experience, etc. 6.6 / 10 57% 22% 17% 4% 6.6 / 10 53% 23% 19% 5% 6.6 / 10 52% 22% 19% 7% 6.5 / 10 53% 20% 19% 8% 6.2 / 10 47% 23% 23% 6% 6.2 / 10 49% 20% 26% 5% Base: Entrepreneurs who are active at the international level or for whom it would be possible. 17

18 International readiness (cont d) Entrepreneurs scored themselves less favourably in terms of having a solid network and finances, as well as having the critical mass to respond to additional needs > Although international entrepreneurs have more experience and evaluated their company more favourably than those who could benefit from expanding internationally, both entrepreneurial segments realize that they can improve greatly. > The three last attributes measured are key components of successful internationalization initiatives. Furthermore, strong positioning on those attributes can generate future momentum. Significantly improving those attributes can catalyze future endeavours. The following aspects are necessary for a successful internationalization initiative. How would you rate your company on these aspects on a scale of 1 to 10? (n=394) Average score % of 7-10 % of 5-6 % of 1-4 Don t know Network strength (strength and usefulness of the different members of the company s business network, both inside and outside the company s current borders) Financial strength of the company (financial health, debtto-assets ratio, etc.) Critical mass (financial, operational and human capacity to meet additional needs) 5.7 / 10 38% 19% 32% 11% 5.3 / 10 31% 23% 38% 8% 4.8 / 10 27% 21% 44% 8% Base: Entrepreneurs who are active at the international level or for whom it would be possible. 18

19 International experience Most entrepreneurs who are already active at the international level have at least one member of their team with pertinent experience; this proportion is significantly lower among those who are willing to develop international initiatives but haven t started yet > For the most part, international experience resides in the executive suite (top management). In larger companies, we see that a significant proportion of key managers and have foreign experience. > Overall, 86% of companies active at the international level have people in their fold with foreign experience. > This percentage falls to 41% among entrepreneurs willing to develop international activities. Which of the following team members in your company have any internationalization experience or foreign experience? Multiple answers allowed. (n=394) One or several members of the executive suite (owner, partners, etc.) has that experience One or more of the company s key managers has that experience One or more of the has that experience 18% 25% 66% We do not have anyone in the company with that kind of experience 20% I don t know / Prefer not to answer 2% Base: Entrepreneurs who are active at the international level or for whom it would be applicable. 19

20 Exploring internationalization initiatives Most entrepreneurs interested in increasing their internationalization efforts intend to do so internally > When asked how they intend to explore the feasibility of increasing their internationalization efforts, three out of five entrepreneurs (60%) asserted they will explore different avenues internally in the near future. This relatively high percentage is driven by respondents currently active internationally (67% vs. 35% of those looking to develop an international presence). This difference makes sense, since those who are already active at the international level have people in their team with pertinent experience to work on that project. > Nearly one in five respondents (18%) will be looking for free external help. > A small percentage of entrepreneurs (10%) said they are not only looking for outside help but that they also plan to pay for this assistance. > One in five entrepreneurs (20%) do not yet know how they intend to explore the feasibility of expanding internationally. This is the case for a statistically greater percentage of entrepreneurs not currently active internationally (36%). > Finally, one in ten respondents (9%) are at a standstill and do not plan on doing anything for the moment. You previously indicated that your company would benefit from increasing your internationalization efforts. What do you intend to do to explore the feasibility of such efforts? Multiple answers allowed. (n=324) We intend to explore different avenues internally in the near future We intend to seek the help of an outside consultant whose services are free We intend to seek the help of an outside consultant whom we will pay We do not yet know We do not intend to do anything for the moment 10% 9% 18% 20% 60% Base: Entrepreneurs who said that their company could benefit from increasing internationalization efforts. 20

21 Aspects for which advice would be required The most sought-after types of advice pertain to finding reliable partners, identifying good business opportunities and obtaining financing > The top three types of advice are quite fundamental and are critical to the overall success of internationalization efforts. > The key to many initiatives is the strength and quality of people involved. It is therefore not a surprise that many entrepreneurs said that the main aspect they would need help with is finding reliable partners (73%). > The next most desired types of advice relate to identifying good business opportunities outside (68%) and obtaining the financing to pursue such endeavours (67%). > The next most popular kinds of advice deal with more technical or specific aspects of internationalization. Nearly half of those surveyed mentioned overcoming obstacles related to trade and regulations (48%), obtaining tax credits (48%), and protecting intellectual property (43%). > The last sorts of advice sought deal with more operational functions of internationalization. One third of respondents want assistance in managing the relationship with all the contributors in a supply chain (34%), and an equivalent proportion want help managing authentication and security requirements (33%). Nearly one in four respondents want additional insight into meeting quality control or process requirements in a supply chain. Which aspects would you need advice about? Multiple answers allowed. (n=72) Finding reliable partners Identifying good business opportunities outside Obtaining financing Overcoming obstacles related to trade and regulations in place Obtaining tax credits Protecting intellectual property rights Managing the relationships with all of the contributors in a supply chain Managing authentication and security requirements Meeting quality control / process requirements in a supply chain I don't know / Prefer not to answer Other 3% 2% 23% 34% 33% 43% 48% 48% 73% 68% 67% Base: Entrepreneurs who intend to seek the help of outside consultants. 21

22 Entrepreneurial environment 22

23 Main challenges In a period of economic recovery, entrepreneurs are challenged by sales and marketing initiatives, as well as their company s finances > The main challenge entrepreneurs identified is sales and marketing (40%). The fact of the matter remains that if there are no sales, there is no business! Given the current economic context, it is not surprising that entrepreneurs said that sales and marketing is their primary challenge. This is the case for a statistically greater percentage of entrepreneurs active at the international level (44%). > In a precarious economic environment, it is of the utmost importance to manage company finances carefully. In fact, managing company finances and cash flows is a challenge for two out of five entrepreneurs (39%). > Furthermore, a significant percentage of respondents said that obtaining financing in the next 12 months is an aspect they will need to address (38%). This is the case for a significant number of entrepreneurs active at the international level (46%). > In terms of operations, over one third of entrepreneurs have issues with time constraints (37%) and reduced profit margins (34%). Reduced profit margins are a challenge for half of the companies (50%) with 50 or more. > Over one in five entrepreneurs identified a series of challenges that can be grouped in four broad categories: human resources (HR); information and communications technology (ICT); operations; and sales and marketing. What are the main challenges you expect to face in the next 12 months? Multiple answers allowed. (n=574) Sales and marketing initiatives Managing finances and cash flows Obtaining financing Time constraints as the owner of my own business Reduced profit margins Human resources (HR): recruitment and employee retention Information and communications technology (ICT): website / online Domestic competition Productivity Increase in the price of raw materials / other expenses Fluctuations in fuel costs Currency fluctuations Controlling the company s growth Development of foreign markets: finding export opportunities 27% 25% 24% 22% 22% 21% 20% 20% 20% 40% 39% 38% 37% 34% Base: All respondents. 23

24 Main challenges (cont d) All other challenges mentioned apply to fewer than one in five entrepreneurs > The remainder of the challenges are more niche in nature and tend to apply to a smaller percentage of businesses. > Generally speaking, larger businesses and entrepreneurs active at the international level face a greater number of challenges. > Finally, there are a few other statistical differences worth noting: A statistically greater percentage of entrepreneurs from Quebec mentioned that they expect to face the following challenges in the upcoming year: controlling the company s growth (32%) finding export opportunities (32%) developing products through R&D (20%) dealing with foreign competition (20%) A significant number of entrepreneurs in Ontario (20%) also mentioned R&D. The main challenge identified by respondents in Atlantic is fluctuations in fuel costs (47%). A significant number of manufacturers face challenges pertaining to the increase in the price of raw materials (39%) and finding export opportunities (37%). What are the main challenges you expect to face in the next 12 months? Multiple answers allowed. (n=574) HR: training and development Succession planning / finding buyers for my business Setting prices (products and services) R&D: product development Managing inventory and reassessing the amount of inventory Foreign competition Technology Distribution network Development of foreign markets: increasing my foreign market share ICT: increasing the return on the current investment Obtaining certification ICT: business process automation ICT: finding experts 19% 19% 18% 15% 14% 13% 12% 12% 12% 11% 8% 7% 6% How to become an exporter ICT: continuity of activities, data management and security No challenges 5% 4% 3% Base: All respondents. 24

25 Main strategies The strategies envisioned for the upcoming year focus mainly on production and strategic development > More than two out of five entrepreneurs (46%) plan on developing new products or services in the next 12 months. This percentage climbs to 53% among entrepreneurs active at the international level. > The current strength of the Canadian dollar makes this an ideal time for entrepreneurs to purchase imported equipment. In fact, nearly one third of entrepreneurs plan on purchasing equipment (31%) in the coming year and 29% plan on increasing production. Both these tactics were mentioned by a greater percentage of manufacturers (50% combined). > From a strategic perspective, one in four entrepreneurs (26%) plan on creating a marketing plan, and a nearly identical proportion (24%) want to develop foreign markets. Developing foreign markets was mentioned by a statistically greater percentage of businesses with 50 or more (42%), entrepreneurs currently active on the international scene (38%) and respondents from Quebec (36%). > Entrepreneurs active at the international level tend to plan for more strategies in the coming year. > Compared with entrepreneurs with no international activities, entrepreneurs active at the international level are more likely to plan on developing new products or services (53%), developing foreign markets (38%), investing in R&D (23%), investing in ICT to create or improve a website or intranet (20%), doing a merger / acquisition analysis (14%), relocating the business (11%), and obtaining certification (11%). Which tactics are part of your strategy to grow your business in the next 12 months? Multiple answers allowed. (n=574) Develop new products / services Purchase equipment Increase the number of / training Increase production Create a marketing plan Develop foreign markets Create a business plan Invest in R&D Invest in ICT: create or improve a website / intranet Purchase new premises / facilities Rationalize operations Do a merger / acquisition analysis 16% 15% 15% 13% 11% 11% 31% 30% 29% 26% 24% 46% Base: All respondents. 25

26 Main strategies (cont d) More niche strategies tend to apply to a smaller group of entrepreneurs > Few respondents are contemplating ICT strategies, with the exception of creating or updating a website or intranet: exploring and evaluating social media (10%) purchasing or updating IT systems (9%) computing solutions / cloud computing (7%) hiring IT (4%) > One in ten entrepreneurs (9%) plan on exploring environmental improvements ( green strategy). > A few entrepreneurs are planning on relocating their business (9%). Entrepreneurs active at the international level (11%) are more likely to be thinking about relocation. > A greater percentage of entrepreneurs from Quebec (15%) would like to pursue some type of certification over the next year. This result is statistically greater than the national result (9%). > Business transition is a hot topic. However, only 8% of respondents are planning for business succession over the next year. Which tactics are part of your strategy to grow your business in the next 12 months? Multiple answers allowed. (n=574) ICT: explore and evaluate social media (Web 2.0) ICT: purchase or update IT systems Explore environmental improvements ("green" strategy) Relocate the business Obtain certification Business transition ICT: find out more about mobile computing solutions / cloud computing Do a portfolio assessment 5% 7% 8% 10% 9% 9% 9% 9% Sell assets ICT: hire with specialized IT management skills 5% 4% No strategy 7% Base: All respondents. 26

27 Target growth Generally speaking, just under half of entrepreneurs have set their target growth at less than 10%, while the other half are aiming for overall growth of 10% or more > More than two out of five entrepreneurs (45%) are targeting income growth of less than 10%. More precisely, 27% of respondents aim for overall growth ranging between 5% and 9.9%. This is the case for a significantly greater percentage of entrepreneurs with no international activities (34%). What growth targets have you set for your business in the coming fiscal year in terms of income / gross sales? (n=574) Less than 0% 2% > The other half of entrepreneurs surveyed (56%) have set their objectives at 10% or more, with 31% of respondents aiming for growth ranging between 10% and 19.9%. Between 0% and 4.9% Between 5% and 9.9% 16% 27% > An impressive 25% of respondents have set their income growth objectives at 20% or more. Nearly one third of entrepreneurs active at the international level (31%) have set their growth objectives at 20% or more. Between 10% and 14.9% 19% Between 15% and 19.9% 12% 20% or more 25% Base: All respondents. 27

28 Organizational structure The larger the business, the more likely it is to have an official organizational structure and an advisory committee > Overall, over two thirds of respondents (68%) said that their company has an official management structure. > The percentage of entrepreneurs who said yes varies by business size: 50 or more (95%) between 20 and 49 (90%) between five and 19 (74%) fewer than five (58%) > One in five respondents (22%) said they have an advisory committee or board. Advisory committees tend to be more widespread among larger businesses with 50 or more (42%). They are also more common among businesses in Quebec (32%) than elsewhere in. Does your business have an official management structure? In other words, does it have a clearly defined organizational chart? (n=574) No, 32% Yes, 68% Does your company have an advisory committee?(n=574) Yes, 22% No, 78% Base: All respondents. 28

29 Entrepreneurial view Over half of entrepreneurs said they are constantly developing new products or services > The majority of entrepreneurs said that they constantly develop new products or services (53%). This ratio is significantly higher among entrepreneurs active at the international level (62%). Which statement best describes you as an entrepreneur? (n=574) > One quarter of those surveyed (25%) mentioned that they develop new products or services only when necessary. I constantly develop new products or services 53% > Finally, another quarter of entrepreneurs (23%) are comfortable with selling just one or a few products or services and improving them so that they sell well. This is the case for a greater percentage of entrepreneurs in Atlantic (39%) and those not active at the international level (35%). I develop new products or services only when necessary (occasionally) 25% I am comfortable with selling just one or a few products or services and improving them so that they sell well 23% Base: All respondents. 29

30 Additional For the most part, entrepreneurs plan on adding only a few additional to their workforce > One in five businesses (18%) do not plan on hiring any additional. > The majority said that they would hire one or two additional workers (51%). This percentage decreases by company size: fewer than five (59%) five to 19 (48%) 20 to 49 (30%) 50 or more (5%) > One quarter of respondents (24%) said that hiring initiatives will seek to bring in between three and nine. Of these respondents,17% plan on hiring three or four workers. Mid-size companies are more likely than others to be planning to hire between three and nine. > Finally, fewer than one in ten entrepreneurs (7%) foresee hiring 10 or more additional workers. > Unsurprisingly, this percentage climbs to 16% among businesses with 20 to 49 and 38% among companies with 50 or more. How many additional do you plan to hire in the next 12 months? (n=574) 10 or more 5 to 9 3 or 4 1 or 2 7% 7% 17% 51% None 18% Base: All respondents. 30

31 Respondent profile 31

32 Respondent profile 55% 33% n=574 BDC client; 48% 36% 35% 22% 7% 8% 3% 2% 1 to 4 5 to to to or more Never been client, 41% Former client; 11% Region Number of BDC status 23% 16% Note that results were not weighted by sector of activity. For this reason, some sectors (namely, manufacturing) may be overrepresented, while others may be underrepresented, compared with the actual Canadian SME population. 9% 8% 7% 6% 5% 5% 4% 3% 3% 2% 2% 2% 5% Manufacturing Business services Wholesale Retail (1-19 empl.) Construction Transportation and storage Recreation, hospitality and tourism Professional services Health Media and culture Retail (20+ empl.) Technology, telco and Internet Primary sector Non-business services Other Base: All respondents. Note that results have been weighted by region and business size to be representative of the Canadian SME population Sector / industry 32

33 Appendix Entrepreneur results, by region and business size 33

34 International initiatives Already included in the company s operations Atlantic Quebec Ontario Western n=574 n=53 n=150 n=194 n=177 Importing 33% 21% 35% 35% 33% Exporting 28% 21% 35% 32% 20% Foreign alliances and partnerships 21% 13% 22% 22% 22% Direct investment outside (FDI) 7% 0% 4% 9% 9% None of the above 44% 65% 45% 37% 45% Already included in the company s operations Less than 5 5 to to or more n=574 n=168 n=236 n=111 n=59 Importing 33% 32% 34% 31% 43% Exporting 28% 24% 29% 37% 46% Foreign alliances and partnerships 21% 19% 23% 23% 33% Direct investment outside (FDI) 7% 7% 6% 7% 7% None of the above 44% 45% 44% 44% 26% Base: Entrepreneurs Numbers in red and green highlight statistically significant differences between sub-groups. 34

35 Reasons for lack of international initiatives Market Intelligence (Marketing) at BDC Reasons mentioned Atlantic Quebec Ontario Western n=245 n=36 n=64 n=67 n=78 Not applicable to our business model 52% 43% 52% 52% 55% The size of my company does not warrant it 27% 30% 27% 23% 29% I have not found resources to help me start these kinds of initiatives I have not found financing to start these kinds of initiatives 11% 7% 7% 12% 13% 9% 6% 1% 13% 11% I think it is all too complicated 9% 4% 4% 11% 11% I am happy with our current market, I do not want to change anything 8% 17% 3% 6% 8% Other 7% 13% 9% 9% 1% Don t know / Prefer not to answer 2% 2% 0% 0% 4% Base: Entrepreneurs who do not currently have any international activities. Multiple mentions allowed; therefore, total exceeds 100%. 35

36 Reasons for lack of international initiatives Market Intelligence (Marketing) at BDC Reasons mentioned Less than 5 5 to to or more n=245 n=76 n=105 n=48 n=16 * Not applicable to our business model 52% 46% 59% 61% 68% The size of my company does not warrant it 27% 35% 17% 14% 12% I have not found resources to help me start these kinds of initiatives I have not found financing to start these kinds of initiatives 11% 13% 5% 13% 14% 9% 10% 8% 2% 0% I think it is all too complicated 9% 11% 5% 6% 6% I am happy with our current market, I do not want to change anything 8% 7% 10% 4% 6% Other 7% 5% 10% 8% 6% Don t know / Prefer not to answer 2% 2% 2% 2% 0% Base: Entrepreneurs who do not currently have any international activities. Multiple mentions allowed; therefore, total exceeds 100%. Numbers in red and green highlight statistically significant differences between sub-groups. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 36

37 Could benefit from international activities Think that the company could benefit from internationalization Atlantic Quebec Ontario Western n=108 n=17 * n=27 * n=28 * n=36 Yes 58% 50% 68% 52% 61% No 26% 36% 25% 23% 26% Don t know / Prefer not to answer 16% 14% 8% 26% 13% Think that the company could benefit from internationalization Less than 5 5 to to or more n=108 n=42 n=43 n=18 * n=5 * Yes 58% 55% 63% 60% 82% No 26% 26% 27% 24% 19% Don t know / Prefer not to answer 16% 19% 10% 16% 0% Base: Entrepreneurs who do not currently have any international activities but for whom international activities could be applicable * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 37

38 Imports Atlantic Quebec Ontario Western n=195 n=10 * n=53 n=74 n=58 Average percentage of expenses related to imports 28% 14% 27% 30% 30% Less than 5 5 to to or more n=195 n=54 n=81 n=35 n=25 * Average percentage of expenses related to imports 28% 33% 24% 21% 22% Base: Entrepreneurs who currently import. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 38

39 Exports Atlantic Quebec Ontario Western n=180 n=10 * n=54 n=77 n=39 Average percentage of revenues related to exports 30% 17% 25% 38% 23% Less than 5 5 to to or more n=180 n=41 n=70 n=42 n=27 * Average percentage of revenues related to exports 30% 30% 29% 34% 21% Base: Entrepreneurs who currently export. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 39

40 Global Supply Chain Part of a Global Supply Chain Atlantic Quebec Ontario Western n=329 n=17 * n=86 n=127 n=99 Yes, we are part of a global supply chain as a supplier Yes, we are part of a global supply chain as a customer / purchaser 23% 22% 17% 28% 22% 22% 13% 12% 24% 26% No, we are not part of a global supply chain 59% 65% 75% 53% 55% Don t know / Prefer not to answer 2% 0% 1% 3% 1% Part of a Global Supply Chain Less than 5 5 to to or more n=329 n=92 n=131 n=63 n=43 Yes, we are part of a global supply chain as a supplier Yes, we are part of a global supply chain as a customer / purchaser 23% 22% 24% 28% 31% 22% 19% 26% 20% 23% No, we are not part of a global supply chain 59% 63% 53% 57% 59% Don t know / Prefer not to answer 2% 2% 1% 3% 0% Base: Entrepreneurs who are active in at least one international activity. Multiple mentions allowed; therefore, total exceeds 100%. Numbers in red and green highlight statistically significant differences between sub-groups. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 40

41 Increased international initiatives Think that increasing internationalization efforts could benefit the company Atlantic Quebec Ontario Western n=329 n=17 * n=86 n=127 n=99 Yes 80% 67% 86% 79% 78% No 11% 24% 11% 10% 11% Don t know / Prefer not to answer 9% 9% 3% 11% 11% Think that increasing internationalization efforts could benefit the company Less than 5 5 to to or more n=329 n=92 n=131 n=63 n=43 Yes 80% 83% 74% 79% 81% No 11% 10% 13% 9% 8% Don t know / Prefer not to answer 9% 6% 12% 13% 11% Base: Entrepreneurs who are active in at least one international activity. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 41

42 Most beneficial international initiatives Atlantic Quebec Ontario Western n=394 n=26 * n=104 n=143 n=121 Foreign alliances and partnerships 57% 64% 59% 54% 59% Exporting 42% 22% 59% 44% 34% Importing 30% 21% 26% 30% 35% Direct investment outside (FDI) 9% 3% 6% 10% 10% None of the above 4% 10% 2% 7% 3% Less than 5 5 to to or more n=394 n=115 n=158 n=74 n=47 Foreign alliances and partnerships 57% 57% 57% 62% 50% Exporting 42% 41% 44% 39% 59% Importing 30% 30% 30% 27% 37% Direct investment outside (FDI) 9% 8% 8% 12% 15% None of the above 4% 5% 5% 4% 0% Base: Entrepreneurs who are active at the international level or for whom it would be applicable. Multiple mentions were allowed, total exceeds 100%. Numbers in red and green highlight statistically significant differences between sub-groups. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 42

43 Desire and determination to pursue internationalization efforts Atlantic Quebec Ontario Western n=394 n=26 * n=104 n=143 n=121 Determined (score of 7 10) 44% 25% 60% 48% 33% Hesitant (score of 5 6) 25% 30% 16% 21% 35% Not very determined (score of 1 4) 29% 46% 24% 28% 31% Don t know / Prefer not to answer 2% 0% 0% 3% 1% Less than 5 5 to to or more n=394 n=115 n=158 n=74 n=47 Determined (score of 7 10) 44% 45% 42% 42% 46% Hesitant (score of 5 6) 25% 27% 25% 18% 20% Not very determined (score of 1 4) 29% 26% 31% 38% 32% Don t know / Prefer not to answer 2% 2% 2% 3% 2% Base: Entrepreneurs who are active at the international level or for whom it would be applicable. Multiple mentions were allowed, total exceeds 100%. Numbers in red and green highlight statistically significant differences between sub-groups. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 43

44 Most beneficial regions of the world Atlantic Quebec Ontario Western n=394 n=26 * n=104 n=143 n=121 United States 84% 79% 81% 88% 81% Asia (China, India, Vietnam, Philippines, Japan, Korea, etc.) 35% 9% 29% 32% 46% Western Europe (Spain, France, England, Italy, etc.) 33% 34% 45% 33% 27% South America (Brazil, Argentina, Chile, Uruguay, etc.) 21% 7% 28% 26% 14% Mexico 19% 11% 24% 23% 13% Oceania (Australia, New Zealand, Polynesia, etc.) 15% 3% 15% 16% 16% Eastern Europe (Poland, Hungary, Romania, Russia, etc.) 14% 12% 26% 14% 8% Caribbean 13% 35% 14% 13% 10% Scandinavia (Denmark, Norway, Sweden, Finland, etc.) 13% 10% 19% 11% 11% Middle East (Turkey, Jordan, Saudi Arabia, United Arab Emirates, etc.) Central America (Guatemala, Belize, El Salvador, Honduras, Nicaragua, Costa Rica, Panama) 12% 4% 12% 12% 13% 11% 7% 15% 14% 6% Southern Africa (South Africa, Mozambique, Zimbabwe, etc.) 5% 0% 3% 9% 3% Central Africa (Cameroon, Gabon, Tanzania, Congo, Kenya, etc.) 5% 0% 9% 8% 1% North Africa (Morocco, Algeria, Tunisia, Libya, etc.) 4% 0% 6% 6% 1% Don t know / Prefer not to answer 2% 7% 1% 3% 0% Base: Entrepreneurs who are active at the international level or for whom it would be applicable. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. Numbers in red and green highlight statistically significant differences between sub-groups. 44

45 Most beneficial regions of the world Less than 5 5 to to or more n=394 n=115 n=158 n=74 n=47 United States 84% 84% 82% 86% 87% Asia (China, India, Vietnam, Philippines, Japan, Korea, etc.) 35% 34% 33% 49% 37% Western Europe (Spain, France, England, Italy, etc.) 33% 36% 29% 35% 35% South America (Brazil, Argentina, Chile, Uruguay, etc.) 21% 16% 24% 36% 31% Mexico 19% 15% 23% 25% 27% Oceania (Australia, New Zealand, Polynesia, etc.) 15% 15% 13% 22% 15% Eastern Europe (Poland, Hungary, Romania, Russia, etc.) 14% 14% 14% 17% 16% Caribbean 13% 14% 13% 19% 8% Scandinavia (Denmark, Norway, Sweden, Finland, etc.) 13% 13% 13% 12% 11% Middle East (Turkey, Jordan, Saudi Arabia, United Arab Emirates, etc.) Central America (Guatemala, Belize, El Salvador, Honduras, Nicaragua, Costa Rica, Panama) 12% 11% 12% 19% 13% 11% 8% 14% 17% 8% Southern Africa (South Africa, Mozambique, Zimbabwe, etc.) 5% 5% 5% 7% 7% Central Africa (Cameroon, Gabon, Tanzania, Congo, Kenya, etc.) 5% 6% 4% 8% 2% North Africa (Morocco, Algeria, Tunisia, Libya, etc.) 4% 3% 4% 13% 2% Don t know / Prefer not to answer 2% 2% 1% 1% 2% Base: Entrepreneurs who are active at the international level or for whom it would be applicable. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. Numbers in red and green highlight statistically significant differences between sub-groups. 45

46 International readiness Entrepreneurs self-assessment of key components for international success Atlantic Quebec Ontario Western n=394 n=26 * n=104 n=143 n=121 Confidence: degree of optimism about the success of the initiative 6.6 / Innovation: the company emphasizes innovation every day, develops innovative products / services, etc. Engagement: on the part of the management team and involved Competitiveness: large market shares, good reputation, unique product, etc. Business plan: internationalization is a good fit with the company s plans Knowledge of the regions targeted by internationalization: team members knowledge, previous experience, etc. Network strength (strength and usefulness of the different members of the company s business network both inside and outside the company s current borders) Financial strength of the company (financial health, debt-assets ratio, etc.) Critical mass (financial, operational and human capacity to meet additional needs) 6.6 / / / / / / / / Base: Entrepreneurs who are active at the international level or for whom it would be applicable. * Results presented for informational purposes only. Results have no statistical validity due to the small sample. Please interpret results with caution. 46