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Small and Mid-Size Business in Alberta A Changing Landscape

Small and Mid-Size Business in Alberta A Changing Landscape. Edward Straw, Vice President – Business Solutions , ATB Business & Agriculture April 10, 2014. Who is ATB Financial?. Staying connected with Alberta’s businesses. 75 th Anniversary. 5,300 A ssociates. 242 Alberta communities.

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Small and Mid-Size Business in Alberta A Changing Landscape

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  1. Small and Mid-Size Business in AlbertaA Changing Landscape Edward Straw, Vice President – Business Solutions, ATB Business & Agriculture April 10, 2014

  2. Who is ATB Financial?

  3. Staying connected with Alberta’s businesses 75thAnniversary 5,300 Associates 242Alberta communities

  4. Who is ATB Business & Agriculture?

  5. Here through the ups and downs Source: Bank of Canada Report C3, August 2012.

  6. Alberta Business Landscape

  7. Make-up of Alberta Businesses 81.6% employ less than 5 people (Micro) 98.1% employ less than 50 people (Small) 1.8% employ 50 to less than 500 employees (Mid-sized) Small & Medium Sized Enterprises (SMEs) Source: Statistics Canada, Business Register (based on business locations), December 2011.

  8. 48% of SMEs only conduct business in Alberta Business Firmographics Business Location(s) Business Scope Change from last quarter Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, with 300 respondents.

  9. Albertans rank high in Foreign Activities Source: ATB Daily Economic Comment, Todd Hirsch – March 11, 2014

  10. A very optimistic future “HOW DO YOU THINK… WILL BE SIX MONTHS FROM NOW?” Your Company Alberta Economy 92% 84% +3 -3 will be better off or the same will be better off or the same (±) Change from last quarter Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents.

  11. Leading the Country in Retail Spending Growth % increase in population Source: ATB Daily Economic Comment, Todd Hirsch – Feb 24, 2014

  12. Introducing the ATB Business Beat Indexes ATB Business Beat Indexes Index (0-100) More optimistic about future performance Less optimistic about future performance Data time periods: Q1 = Jan 2013, Q2 = May 2013, Q3 = Aug/Sept 2013 & Q4 = Dec 2013. Source: ATB Financial, Survey on Alberta SMEs 2013.

  13. FACT Majority of Alberta SMEs are growing

  14. OVER THE NEXT 24 MONTHS, DO YOU HAVE ANY PLANS TO…? “% YES” Intentional growth is paying off 72% of SMEs are intentionally trying to grow their business. 53% are seeing growth in their business as a result of their efforts. 14% are experiencing ‘organic’ growth. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents.

  15. 3 Tips for Intentionally Growing Your Business 24% of SME owner/operators report advertising or marketing is important 19% Develop customer relationships 19% Hire and retain quality employees “GOOGLE ADVERTISING, ADVERTISING ONLINE. IN OUR BUSINESS, BEING IN FLOWERS PEOPLE WHO WANT TO SEND FLOWERS DO NOT GO TO YELLOW PAGES, THEY GO ONTO GOOGLE AND TYPE IN FLORISTS IN CALGARY. ” General Manager, Retail Flower Shop, 17 years in business, $500k -< $1MM in revenue. Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents.

  16. FACT Running a Business is harder today than it was 5 years ago

  17. Running an SME hasn’t gotten any easier! “DO YOU FEEL IT IS EASIER OR MORE DIFFICULT TO RUN A SMALL BUSINESS TODAY THAN IT WAS FIVE YEARS AGO?” TODAY 5 YEARS AGO • 70% say it is more difficult to run a business TODAY • 16% say it’s about the same • 10% say it was harder 5 YEARS AGO Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents.

  18. Small businesses who report it’s harder point to: “WHY DO YOU THINK ITS MORE DIFFICULT TO RUN A BUSINESS TODAY?” “JUST TO TRY TO GET PEOPLE, FOR STAFF. NOBODY WANTS TO BE A TRUCK DRIVER THESE DAYS. THE WOES OF RURAL ALBERTA, WE JUST DON'T HAVE THE PEOPLE. EVERYBODY WANTS TO BE IN THE CITY. WE HAVE TO COMPETE WITH ALL THOSE LARGE PLANTS UP AT THE TAR SANDS. ” Owner, Construction business, 50 years in operation, 5 to 19 employees, $3M-$5M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report it’s MORE DIFFICULT to run a business today (n= 211 ); responses mentioned by 3% or more are shown.

  19. Small businesses who believe it’s easier mention: “WHY DO YOU THINK ITS EASIER TO RUN A BUSINESS TODAY?” “THE EASE OF COMMUNICATING AND TECHNOLOGY HAS MADE IT EASIER TO RUN. WE CAN COMMUNICATE BETTER WITH OUR CUSTOMERS VIA THE WEB AND OTHER SOURCES AND THE OPERATIONS OF THE COMPANY ARE MORE STREAMLINED BECAUSE THEY ARE MORE COMPUTERIZED. ” General Manager, Energy or Oil and Gas, 38 years in business, 5 to 19 employees, $3M-$5M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report it’s EASIER to run a business today (n= 30 ); responses mentioned by 7% or more are shown.

  20. What are the HR & Labour challenges? Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 147 respondents reporting the area of HR/Labour is the most difficult.

  21. FACT Many SMEs are going to change hands in the next 5 years

  22. 34% of SME owners plan on exiting their business in the next 5 years Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents.

  23. 52% of SMEs expecting to be sold, transferred, or wound down (in the next 5 years) DO NOT have a succession plan! “No time to deal with the issue” “Have not thought about it” “Don’t know where to start” “It is too far in the future” “Have not decided what to do with business” Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents.

  24. 48% of SMEs expecting to be sold, transferred, or wound down in the next 5 years (with a succession plan) expect to sell to a third party Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents.

  25. Boomer Businesses are Booming! 29% of SME owner/operators report being 55+ years of age. 55% of Alberta SMEs owners/operators (aged 55+) do not have a succession plan. 35% of Alberta SMEs owners/operators (aged 55+), who do not have a succession plan, report having “no plans to let go of the business”. Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents.

  26. FACT Technology has made a positive impact on business operations

  27. “WOULD YOU SAY TECHNOLOGY HAS HAD A POSITIVE OR NEGATIVE IMPACT ON YOUR BUSINESS OPERATIONS OVER THE LAST FIVE YEARS?” Technology has improved business operations Multiple Mentions POSITIVE IMPACT “IT'S MORE EFFICIENT, THERE'S LESS ERRORS DUE TO PENMANSHIP. BETTER CLARIFICATION OF IDEAS. IMPROVEMENTS TO PATIENT CARE, WE NO LONGER HAVE THAT LACK OF COMMUNICATION, LACK OF UNDERSTANDING DUE TO CLERICAL ERRORS. ” Clinic Manager, Health Care, 25 years in business, 1 to 4 employees, Undisclosed revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents.

  28. Technology’s POSITIVE impact “WHY DO YOU THINK TECHNOLOGY HAS HAD A POSITIVE IMPACT ON YOUR BUSINESS?” “EASIER TO COMMUNICATE WITH CUSTOMERS, THROUGH EMAIL, THROUGH SOCIAL MEDIA, THROUGH WEBSITE CONNECTIONS. ” Owner, Wholesale business, 32 years in business, 5 to 19 employees, $1M-$3M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report technology has had a POSITVE impact on their business (n=259); responses mentioned by 3% or more are shown.

  29. Technology’s NEGATIVE impact “WHY DO YOU THINK TECHNOLOGY HAS HAD A NEGATIVE IMPACT ON YOUR BUSINESS?” “BECAUSE OF THE ONLINE RETAILERS. THEY CHECK THE PRICING ON ONLINE RETAILERS, THEY COME INTO YOUR STORE TO ACTUALLY LOOK AT IT. FEEL IT, TOUCH IT, HOLD IT. BUT THEN THEY GO BACK TO THE ONLINE RETAILER THAT DOESN'T HAVE THE RENT AND STAFFING CHARGES AND THEY BUY IT FROM THEM. THAT'S A NEW THING THAT'S CAME ON IN THE LAST 5 YEARS THAT WE'RE HAVING TO GRAPPLE WITHQUOTE. ” Owner, Retail business, 19 years in business, 5 to 19 employees, $1M-$3M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report technology has had a NEGATIVE impact on their business (n=37); responses mentioned by 5% or more are shown.

  30. Best Advice for Start-up Success

  31. Best advice for start-up success from established businesses “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. Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, responses mentioned by 3% or more are shown.

  32. Reasons for Becoming an Entrepreneur

  33. 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 35 years in business, $1MM - $3MM in revenue. Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 98 respondents.

  34. Barriers for Growth of Small-Sized Business

  35. Uncovering the greatest barriers to grow for small-sized businesses 47% 20% 17% 13% 11% 10% 9% 8% 6% 6% 6% 4% Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, total responses mentioned by 4% or more are shown. .

  36. Conclusions

  37. Key Insights 1 Majority of small businesses say it’s harder to run a business today than five years ago. 2 A large wave of business succession is coming. 3 Investments in technology are yielding positive changes for business operations.

  38. Questions? Edward Straw VP, Strategic Business Solutions (403) 974-8088 or estraw@atb.com

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