1
Alberta Business BeatVolume 3, September/October 2013
INTERNAL with notes
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Background and Methodology
3
Business & Agriculture
Background & Objectives
Background• ATB Financial commissioned NRG Research Group to conduct a survey of 300
randomly selected small- to medium-sized businesses in Alberta each quarter, beginning in Q2-FY2014.• The purpose of the study is to gain an understanding the challenges faced by
small- to medium-sized businesses in Alberta, and to track confidence in the business climate in Alberta.
Research Objectives»Measure business owners and managers’ perceptions of the current
business climate compared with six months ago, as well as their assessments of what the business climate will be like six months from now;»Understand the impact of the June flooding for small to medium-sized
businesses; »Gauge the likelihood of their company’s future investment plans;»Determine best advice for a start-up to succeed; and,»Uncover the barriers for growth for small-sized businesses; and,»Profile the firmographics as well as respondent demographics for small-
to medium-sized businesses in Alberta.
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Business & Agriculture
Methodology
• Randomly selected Alberta SME’s
Qualifying Businesses
< 500 employees<$20 million
annual revenuesMust be financial
decision makers or influencers• Excluded
agriculture, government,
financial institutions, media,
market research, PR, advertising
and communications
sectors
Field dates:Aug 22 – Sept 4,
2013
Telephone + online option
• Over 3,000 businesses contacts
made and 300 completed the
survey• Margin of error is
+/- 5.8%
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Business & Agriculture
Best advice for start-ups is to focus on getting ‘the basics’ right
Expectations for the Alberta economy are just taking off
Recovery from the flood continues, but growth plans were not affected
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2
3
Key Insights
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Alberta Small Business Profile 2013
7
Business & Agriculture
Half of Alberta SMEs earn revenues in excess of $1,000,000
Of the SMEs we surveyed, half (49%) report fewer than five employees and half (49%) report 2012 earnings in excess of $1,000,000.
49%41%
10%0 to 4 'Micro'5 to 49 'Small'50 to 499 'Med'
23%
14%
14%
20%
17%
13% < $250k
$250-500k$500k-<$1MM$1-<$3MM$3-<$10MM$10MM+
Number of Employees
Annual Revenues 2012
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
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Business & Agriculture
Business FirmographicsBusiness Life Stage
PhaseIntentional
GrowthStart-up
Initial Growth
Established
Expansion
Mature
Winding Down
3%
9%
46%
19%
15%
8%
Intentional Growth
Organic Growth
No Growth, but Trying
No Growth, NOT Trying
52%
14%
20%
14%
72% of SMEs are TRYING to
grow their business
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
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Business & Agriculture
Up to 5 years
6 to 10 years
11 to 15 years
16 to 20 years
Over 20 years
11%
16%
16%
12%
45%
No borrowing needs
Less than $1MM
$1 to < $3MM
$3 to < $10MM
$10MM+
Don't know/Refused
48%
36%
5%
4%
2%
6%
Business Firmographics
$1MM+
11%
Borrowing Needs
# of Years in Operation
MEAN25
years
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
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Business & Agriculture
Business FirmographicsIndustry
Energy/ Oil & Gas
Retail Trade
Construction
Health & Social Asst
Hospitality/ Restaurant
Transp/ Warehouse
Prof, Sci & Tech
Education
Manufacturing
Arts, Entertain & Rec
Business Srvs: Legal/Accting
16%
15%
13%
7%
6%
4%
4%
4%
3%
3%
3%
Franchise IndustryRetail 30%
Automotive 17%
Food Services 9%
Health 7%
Non-profit 7%
Travel, Leisure & Accommodation 6%
Beauty & Fitness 4%
Energy/ Oil & Gas Services 4%
Financial Services/ Insurance 3%
8% of SMEs are
franchises
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents, responses of 3% or more are shown.
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Business & Agriculture
46%
24%
30%
Urban area(s) onlyBoth urban and rural areasRural area(s) only
Business Firmographics
Business Location(s)
49% of SMEs only conduct business in
Alberta
Within Alberta
In other parts of Canada
In the US
In international markets outside of Canada or the
US
98%
50%
20%
13%
Business Scope
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
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Business & Agriculture
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, Aug-Sept 2013, with 300 respondents.
Yes
No
Don't know
54%
43%
3%
Does your business have a store front?*
* asked only in Aug-Sept 2013
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Business & Agriculture
Respondent Demographics
Owner/ Operator
General Manager (GM) or Office Manager
Chief Executive Officer (CEO) or President
Senior Manager or Manager
Managing Director, Senior Director or Director
Controller
Chief Financial Officer (CFO)
45%
20%
14%
6%
6%
4%
3%
18-34
35 to 44
45 to 54
55 to 64
65+
12%
20%
32%
26%
9%
35%55+Title/ Role Age
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents, responses of 3% or more are shown.
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Business & Agriculture
Male62%
Fe-male38%
38%
48%
14%
Sole decision-makerShares responsibilityInfluences decisions
Respondent DemographicsRole in Financial
DecisionsGender
Source: ATB Financial, Survey on Alberta SMEs, Jan/May/Aug-Sept 2013; 906 respondents.
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Best Advice for Start-up Success
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Business & Agriculture
Best advice for start-up success from established businesses
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, responses mentioned by 3% or more are shown.
Don’t rely on the governmentManage inventory and records well
Keep up to date with technology/ adapt to the timesOffer something unique with yor product or service
Have good quality productsBe honest
Focus on marketing/ advertisingFind your niche in a sizeable market
Design a sound business plan (and stick with it)Surround yourself with good people in your network
Set realistic expectationDon't give up/ be positive
Work hardDon't grow too quickly/ start small
Hire and maintain good staffKeep expenses low/ no dept
Research the marketplaceKeep cash flowing/ watch cash flow carefully
Focus on employees & client satisfaction
3%3%3%3%3%3%3%
4%5%
6%6%6%
8%10%10%
11%15%
16%16%
“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.
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Reasons for Becoming an Entrepreneur
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Business & Agriculture
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
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 98 respondents.
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 Owner35 years in business,$1MM - $3MM in revenue.
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Barriers for Growth of Small-Sized Business
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Business & Agriculture
Uncovering the greatest barriers to grow for small-sized businesses
Limited product/service differentiation from competitors
Customer acquisition/ retention
Limited in-house marketing expertise
Overhead costs (rent/utilities)
Cost of labour
Difficulty finding capable management
Poor sales or weak market conditions
The need for regulatory compliance or Gov't regulations
Inadequate cash flow or poor cash flow management
Facing tough competition
Limited access to capital or additional financing
Difficulty hiring or retaining employees
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1
3
4%
4%
3
5%
7%
6%
10%
12%
28%
1
5%
3
2
4%
6%
5%
4%
7%
7%
8%
19%
Biggest Challenge 2nd Most Difficult
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, total responses mentioned by 4% or more are shown..
47%20
%
11%10
%9%
6%
8%
17%
13%
6%
6%
4%
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Impact of the June 2013 flood
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Business & Agriculture
The impact from the flood was far reaching
say their business was negatively impacted by this event
(‘greatly/somewhat’)
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents.
Positively impacted
Not impacted
Somewhat negatively impacted
Greatly impacted (negatively)
10%
69%
17%
4%
21%
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Business & Agriculture
Expected future impact on the Alberta economy is considerable
…anticipate the flooding will still be impacting the Alberta economy six months from now.
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents.
60%
17%
43%13%
25%2% Significant negative impact
Some negative impact
No impact
Positive impact
Don't know
This is the slide that contradicts the economy optimism growth. Potentially a leading question to be removed from the deck.
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Business & Agriculture
Those negatively impacted felt the greatest effect on their revenues
“HOW WAS YOUR BUSINESS NEGATIVELY IMPACTED?”
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013; among those negatively impacted; 64 respondents.
Expenditures
Indirect economic impact
Operationally impacted
Physically impacted
Revenues
6%
10%
16%
20%
34%
Among the 21% of businesses who were negatively impacted, 40%
experienced either a loss in revenue or had additional expenditures.
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Business & Agriculture
The majority of SMEs negatively impacted expect to fully recover within six months
“IN SIX MONTHS’ TIME, DO YOU FEEL YOUR BUSINESS WILL…?”
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013; among those negatively impacted; 64 respondents.
Don't know
No recovery yet
Partially recover
Fully recover
5%
9%
27%
59%
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Business & Agriculture
FLOOD NEGATIVELY IMPACTED BUSINESS
FLOOD POSITIVELY IMPACTED BUSINESS
“We had massive loads of appliances going to High River and Calgary for replacement of damaged ones.
”
“There was no business because tourists couldn’t come here. The roads were closed. People where
concerned that Canmore was totally destroyed.
”Owner, Bed & Breakfast, 18 years in operation,Less than $250k in revenue.
General Manager, Family Trucking Business, 30 years in operation,$1MM to $3MM in revenue.
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013; among those negatively (n=64) or positively impacted (n=29).
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Business Confidence
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Business & Agriculture
A very optimistic future
Alberta Economy
87%will be better off or the
same
Your Company
89%will be better off or the
same
“HOW DO YOU THINK… WILL BE SIX MONTHS
FROM NOW?”
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents.
(±) Change from last quarter
n/c+10
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Business & Agriculture
Introducing the ATB Business Beat Optimism Indicators
Q1 2013 Q2 2013 Q3 201340
45
50
55
60
65
70
7570.2 69.8 69.8
70.568.8
69.5
55.4
59.8
66.2 ATB - Business Optimism IndexCFIB - Business Barometer In-dexATB - Economy Optimism Index
Data time periods: Q1 = Jan 2013, Q2 = May 2013 & Q3 = Aug 2013
Source: ATB Financial, Survey on Alberta SMEs 2013; CFIB Business Barometer Index 2013.
More optimistic about future performance
Less optimistic about future performance
Index (0-100)
ATB Business Beat Optimism and CFIB Business Barometer Indices
Retail +17.7Energy +4.4
Construction -13.1
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Business & Agriculture
Shoppers show confidence in July
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 24, 2013
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Business & Agriculture
Oil sends sales soaring
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 4, 2013
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Business & Agriculture
(Fewer) pretty pink houses for you and me
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 10, 2013
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Business & Agriculture
Independent businesses feeling the joy
Source: ATB Daily Economic Comment, Todd Hirsch – Sept 10, 2013
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Business Growth
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Business & Agriculture
Intentional growth is paying off
75% of SMEs are intentionally trying
to grow their business.
Expand in foreign markets
Downsize your operations and sell assets
Purchase another company
Purchase/build commercial real estate
Invest in R&D
Commercialize new products or services
Expand in domestic markets
Invest in new IT
Purchase equipment/machinery
7%
7%
8%
17%
18%
25%
34%
36%
59%
OVER THE NEXT 24 MONTHS, DO YOU HAVE ANY
PLANS TO…? “% YES”
57% are seeing growth in their
business as a result of their efforts.
12% are experiencing
‘organic’ growth.
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept2013, 300 respondents.
96% have not changed their
investment plans because of the flood
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Alberta Advantage
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Business & Agriculture
I believe the Alberta advantage is…
18% of SME owner/operators report the rich and diverse economy
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 97 respondents.
13% The oil industry
10% Lots of job opportunities
“THE STABILITY OF THE LONG TERM ECONOMIC FACTORS AROUND THE PROVINCE. WE HAVE NEVER REALLY HAD A LONG
TERM DOWNTURN IN OUR ECONOMY, SO WE HAVE ALWAYS MANAGED TO PULL OUT OF IT QUICKLY AND COME OUT ON TOP.
”Owner, Construction Company, 37 years in business,Less than $250k in revenue.
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Business & Agriculture
What keeps me in Alberta is…
24% of SME owner/operators report … It is my home
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 99 respondents.
14% The business opportunities
13% My family is here
“I WAS BORN AND RAISED HERE. I'M PROUD TO BE AN ALBERTAN. WE HAVE A STRONG ECONOMY AND IT'S THE BEST PLACE IN THE
WORLD TO LIVE.
”General Manager, Retail Business, 57 years in business,Undisclosed revenue.
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APPENDIX: Volume 3 - Firmographics and Respondent Demographics
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Business & Agriculture
Half of Alberta SMEs earn revenues in excess of $1,00,000
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
Of the SMEs we surveyed, nearly half report fewer than five employees, half
(53%) report earnings in excess of $1,000,000 in 2012.
47%
39%
14%0 to 4 'Micro'5 to 49 'Small'50 to 499 'Med'
25%
12%11
%19%
20%
14% < $250k
$250-500k$500k-<$1MM$1-<$3MM$3-<$10MM$10MM+
Number of Employees
Annual Revenues 2012
Change from last quarter
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Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
Business FirmographicsBusiness Life Stage
PhaseIntentional
GrowthStart-up
Initial Growth
Established
Expansion
Mature
Winding Down
2%
11%
46%
22%
11%
7%
Intentional Growth
Organic Growth
No Growth, but Trying
No Growth, NOT Trying
57%
12%
18%
13%
75% of SMEs are TRYING to
grow their business
Change from last quarter
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Business & Agriculture
Less than 5 years
6 to 10 years
11 to 15 years
16 to 20 years
Over 20 years
12%
16%
15%
10%
47%
No borrowing needs
Less than $1MM
$1 to < $3MM
$3 to < $10MM
$10MM+
Don't know/Refused
48%
37%
6%
2%
2%
5%
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
$1MM+
10%
Borrowing Needs
# of Years in Operation
MEAN24
years
Change from last quarter
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Business & Agriculture
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents, responses mentioned by 4% or more are shown.
Industry
Retail Trade
Construction
Energy/ Oil & Gas
Hospitality/ Restaurant
Health & Social Asst
Prof, Sci & Tech
Transp/ Warehouse
Arts, Entertain & Rec
Education
Manufacturing
18%
15%
12%
5%
5%
4%
4%
4%
4%
4%
Franchise Industry (n=20)Retail 9
Non-profit 3
Automotive 2
Food Services 2
Health 1
Business Services 1
Other 2
7% of SMEs are
franchises
Change from last quarter
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Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 7 respondents.
“It’s something I like to do”“I know a lot about it”“Financial stability”
2% of SMEs surveyed considered themselves in the start-up stage of their business life cycle
Business FirmographicsStart-ups: what made you choose this
industry?
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Business & Agriculture
43%
34%
22%
Urban area(s) onlyBoth urban and rural areasRural area(s) only
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
Business Location(s)
49% of SMEs only conduct business in
Alberta
Within Alberta
In other parts of Canada
In the US
In international markets outside of Canada or the
US
98%
50%
20%
13%
Business Scope
Change from last quarter
46
Business & Agriculture
Business Firmographics
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
Yes
No
Don't know
54%
43%
3%
Does your business have a store front?*
* New question this quarter
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Business & Agriculture
Respondent Demographics
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents, responses mentioned by 3% or more are shown.
Owner/ Operator
General Manager (GM) or Office Manager
Chief Executive Officer (CEO) or President
Managing Director, Senior Director or Director
Senior Manager or Manager
Chief Financial Officer (CFO)
Controller
Vice President
Administrator
46%
19%
10%
6%
6%
3%
3%
3%
3%
18-34
35 to 44
45 to 54
55 to 64
65+
16%
18%
32%
27%
7%
34%55+Title/ Role Age
Change from last quarter
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Business & Agriculture
Male64%
Female
36%
39%
46%
15%
Sole decision-makerShares responsibilityInfluences decisions
Respondent Demographics
Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, with 300 respondents.
Role in Financial Decisions
Gender
Change from last quarter