BDC, Canada’s bank for entrepreneurs, has released comprehensive research that highlights four critical trends shaping Canada’s future business landscape.
“4 key trends shaping the future of Canada’s businesses” is meant to help entrepreneurs plan their next business move in a time of constant change, said the bank in a news release.
“We are past the point where adopting new technologies is good advice; it is mandatory”, said Pierre Cléroux, VP Research and Chief Economist, BDC. “Increasing costs, changing consumer behaviors, labour shortages and technological trends all interact with one another. By adopting
new technologies, small businesses can turn potential disruptions into opportunities to shape their own future and drive their business forward.”
Over the past five years, small and medium sized enterprises (SMEs) have had to adapt to several crises: the COVID-19 pandemic, the 2021-2023 global supply chain crisis, rising inflation, labour shortages and rapid technological change—including a rapid rise in e-commerce and conversational artificial intelligence (AI), said the report.
The study offers insights and tools to help entrepreneurs anticipate what’s ahead and make informed decisions to ensure long-term success:
Trend #1: Increasing costs will remain a concern
The study finds that 75% of businesses say rising costs have affected their business. The industrial product price index (IPPI), which tracks the price of products at factory gates, increased by 35% between Spring 2020 and Spring 2022. While some input prices have and will come down, the price of energy will remain elevated as extreme weather events affect electricity output, increased electricity demand continues to wait for new investments, and geopolitical situations maintain gas prices above the pre-pandemic average.
Optimizing energy consumption and adopting cost-saving technologies can mitigate these pressures. While automation and AI tools can help cut costs and improve efficiency, it is important to focus on improving business processes before investing in new technology, to identify inefficiencies and maximize the impact of these investments.
Trend #2 – Zoomers as consumers
About two-thirds (66%) of Canadians are willing to pay extra for locally produced products, and 50% are willing to pay extra for environmentally friendly products or services. Zoomers, who are born between 1997 and 2012, are significantly more likely to pay extra for environmentally friendly clothes, shoes, and accessories (71%) compared to other generational cohorts (54%). Considering that all Zoomers will be adults by 2030, the market for environmentally friendly products and services will continue expanding.
Offering competitive pricing without compromising quality and promoting more local and environmentally friendly products are great ways to attract and retain these new consumers. Adopting Environmental, Social, and Governance (ESG) criteria can attract major buyers as well. In a previous study, BDC forecasted that 92% of major buyers would require their suppliers to disclose at least one ESG criterion this year. Reporting on ESG efforts is increasingly necessary to enter the supply chain of large companies. In 2022, 59% of suppliers had to disclose some ESG criteria to at least one buyer. This is expected to rise to 72% by 2025.
Trend #3 – Labour shortages will persist over the next decade
This will remain a pressing issue, particularly for skilled workers: nearly 70% of future job openings will require post-secondary education or management skills, which are areas currently reporting the lowest unemployment rates, making it even harder to find qualified candidates. It seems that 88% of businesses think it will be just as hard or harder to find employees in the next five years. Among businesses anticipating worsening labour challenges, 33% are not planning strategies for hiring, training, or retaining employees. There is a significant gap in preparedness, primarily among small businesses of less than 100 employees.
The study presents the top three strategies for dealing with labour shortages: 1. Technology and automation can reduce the time employees spend on repetitive or low-value tasks. This makes it possible to produce more with less employees; 2. A people strategy with competitive compensation, growth opportunities and a positive culture can help attract and retain talent; 3. Expanding the hiring pool by upskilling candidates through training, forming partnerships with universities and schools, and hiring diverse workers can help ease labour and skills shortages.
Trend #4 – The rapid pace of technological change
With 82% of businesses already considering technology critical, and 38% anticipating significant disruption from new technologies, it is imperative for entrepreneurs to embrace digital transformation. Technology can automate repetitive tasks, allowing employees to focus on higher-value activities. Advanced technologies, such as AI, cloud computing, and cybersecurity can also help by enhancing productivity, improving customer service, and providing a competitive edge.
Related articles:
- Canadian Consumers Changing Priorities Amid Shift with Retail Impacted: BDC Report
- Scotiabank survey highlights succession challenges for small businesses (Interview)
