Before 2018 has even faded into the rearview mirror, we’re peering into the crystal ball to predict what the rest of the year has in store for Canada’s small and medium-sized businesses.
Here are five predictions for small business trends to expect as we move further into the year.
1. Cautious optimism
A few things could help boost Canadian SMB growth in 2019. First, the federal taxation rate for small businesses falls to nine per cent in 2019, down from 10 per cent in 2018 and 10.5 per cent in 2017. Second, SMBs may enjoy a high, so to speak, from the recent legalization of cannabis, which will bump up the Canadian economy by a total of $8 billion over the next couple of quarters, according to TD Bank economists.
In typical Canadian fashion, however, SMBs north of the 49th parallel are tempering those reasons for optimism with a healthy dose of caution. In one of its final business barometer readings for 2018, the Canadian Federation of Independent Business (CFIB) characterized small business confidence in this country as “flat and unspectacular” heading into 2019.
Although Canadian SMBs surveyed by CFIB expect to raise their prices by 2.2 per cent and hike wages for their workers by two per cent over the next 12 months, the CFIB concluded that “overall, about 42 per cent of business owners say their firms are in good shape while 11 per cent say they are in poor shape — pretty much the average for the year to date.”
2. Bigger tech spending
IDC expects Canadian businesses (of all sizes) to collectively spend $16 billion on digital transformation technologies like the Internet of Things, artificial intelligence and robotics in 2019 — a whopping 20 per cent jump from 2018.
Despite fears of U.S. policy changes dampening Canada’s economic growth, Canadian SMBs will likely participate in this 2019 IT spending spree. Why? Smaller companies today see new digital tech as absolutely critical to keeping up with larger competitors and rising customer expectations.
“Over the next few years, the companies that cannot adapt to this new paradigm will find it hard to compete in the marketplace,” warns senior IDC analyst Yash Ahuja.
3. AI and IoT take hold
In its global SMB predictions report for the coming year, IDC suggests the majority of medium-sized businesses in developed countries will implement cognitive or AI software by the end of 2019. By 2021, IDC expects one-third of SMBs “in key industries” will use IoT “to collect and evaluate real-time external data.”
In a webcast fleshing out IDC’s predictions, SMB research VP Ray Boggs said IoT, in particular, will help small and mid-size organizations hone their inventory and supply chain management to meet consumer demand for quick order fulfillment and fast shipping.
4. Millennials transform work
“Millennials are an increasing share of the workforce, especially for SMBs,” IDC senior research analyst Carla La Croce noted during that same webcast.
The firm predicts that by 2023, half of SMBs “will redefine themselves according to the changing nature of work,” as millennials reshape the philosophical approach — and physical environment — of businesses.
Many millennials seek work that can provide them with a sense of meaning and purpose rather than just a pay cheque, Boggs added. He said SMBs can cater to this trend by offering flexible workspaces, a collaborative culture and opportunities for personal (not just professional) development. La Croce said this will fuel “a shift in the SMB workplace to automation and digital co-working, which will lead to greater collaboration and integration between humans and machines.”
To attract millennial workers, “companies are adopting a borderless and agile culture by moving towards online communities and platforms to acquire new skills and new talent,” La Croce said.
5. Voice and location-based marketing
In a recent blog post looking ahead to 2019, Intuit highlighted voice search and location-based technology as two of the top SMB marketing trends for the coming year.
“As consumers increasingly turn to voice search, small businesses must understand how to get their businesses found,” the SMB accounting software provider suggested. It cited ComScore’s projection that 50 per cent of all searches will be voice-based by 2020.
While location-based tech has been around for quite a while, Intuit points out that its user base is still growing: 242 million people accessed location-based services on mobile devices in 2018, up from 220 million in 2017. Findings from a 2018 study by Factual seem to indicate location-based marketing works. More than 80 per cent of the surveyed marketers said the technology helped them increase their customer base, customer response rates and customer engagement levels.
There you have it. After peeking into the crystal ball for a glimpse of 2019, don’t forget to take a quick look in the mirror, too. Then, pause to congratulate yourself for all the hard work you put into running a business over the past year.