Low commodity prices weight on Prairie entrepreneurs

Limited cash flow also a concern for business owners when it comes to investing in their companies these days, according to BDC survey

Many Canadian entrepreneurs will continue investing in their companies in 2020 despite growing uncertainty about world economies. But business owners in the Prairies are the most pessimistic, mostly because of low commodity prices and limited cash flow, says the latest annual survey by BDC.

The study on investment intentions found that entrepreneurs in the manufacturing and services sectors expect to see their businesses’ sales grow and they intend to hire workers to meet a sustained demand for their products and services. Investment intentions are also rising among exporters but are sluggish for businesses focused on selling to the domestic market, said the report.

Pierre Cleroux
Pierre Cleroux

“Canadian entrepreneurs will keep investing in their companies despite international uncertainty and lower global growth. There’s reason to be optimistic: at the end of 2019, the United States, Mexico and Canada signed a new free trade agreement, reinstating favourable conditions for Canadian products and services,” said Pierre Cléroux, BDC’s Vice President Research and Chief Economist.

Key findings include:

  • Canadian business owners plan to increase their investments in technology, marketing initiatives, intellectual property and employee training. But investments in tangible assets such as real estate, machinery and equipment will decline, a trend BDC identified in previous studies;
  • Investment intentions are highest in Ontario and Quebec where manufacturing, technology and services are the strongest sectors;
  • Investment intentions are declining in British Columbia where spending intentions on machinery and equipment have significantly decreased; and
  • Labour shortages are of concern in some areas, notably Quebec, where they are the top factor limiting investment.

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