Q2 2024

SME News Q2 2024/ News Canadian SMEs optimistic about growth despite technical skills challenges • PayPal's 2024 Business of Change Report uncovers the growth barriers Canadian small-medium enterprises are facing and the potential opportunities that exist with operating online. • 47% of Canadian online small business owners admit they have not expanded in the last three years – with a lack of technical expertise as a leading barrier to growth for more than half (59%) of respondents. • 70% of SMEs that sell online believe it is important to invest in technology and Artificial Intelligence (AI) skills to adapt to a rapidly changing online environment While nearly half (47%) of all Canadian online small-medium enterprises (SMEs) report their business has not expanded in the last three years, this lack of growth hasn't dampened their optimism. Eighty-two per cent of SMEs believe that with the right strategies to overcome barriers, their business has the potential to experience decent growth. PayPal's 2024 Business of Change Report reveals more than half (63%) of online businesses plan to expand their business online in the next one to two years, but nearly six in ten (59%) feel the lack of technical expertise will limit their business' growth. Surveying 500 small business owners across Canada, this report uncovers that although the majority (88%) of online Canadian small business owners agree online sales are key to expanding their business, 66 per cent say that setting up a business has been harder than they thought. Barriers to growth The research delves into the primary barriers Canadian SMEs surveyed perceive as potential hindrances to their short-term growth plans. These include: • Challenging economic climate (42%) • Competition in the industry (36%) • Consumers purchasing less (32%) It isn't just external factors that business owners feel will limit their ability to expand – they feel a lack of business confidence and skills will hold them back. Almost half (48%) of respondents identify acquisition of new customers as a significant challenge in expanding their online presence, whereas more than a third (33%) face difficulties in boosting customer conversion rates, and a quarter (24%) grapple with cashflow management. What's more, one in five (19%) say they find it difficult to know which payment methods to offer, such as instalment payment options like buy now, pay later or offering a range of digital wallets that consumers prefer to pay with. "With over 80% of online sellers encountering growth hurdles, it's imperative that we help them overcome roadblocks," said Nitin Prabhu, Vice President, Small Business and Financial Services, PayPal. "With PayPal Complete Payments, our most advanced offering in the market, we're committed to simplifying the complexities faced by small business owners in Canada. Our comprehensive solution fosters growth, provides advanced fraud protection, and streamlines cross-border trade, empowering entrepreneurs to thrive." Recent research shows there were over 70,000[2] reported cybersecurity incidents in Canada in 2023, marking a 25 per cent increase from the previous year. In a world where cybersecurity risks continue to be a threat, tackling the day-to-day responsibilities of operating a business online isn't the only thing Canadian small businesses have to worry about. Nearly half (46%) report they do not feel prepared about their ability to protect their business and customers from fraudulent transactions. This is in addition to 43 per cent who are worried about their ability to manage and protect customer information online.