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To ensure their sustainability and growth, Quebec SMEs will have to overcome several major challenges in the short- and medium-term, particularly in terms of labour and technological investments.
These are the results revealed by a recent Raymond Chabot Grant Thornton (RCGT) survey of 300 Quebec business leaders. According to the telephone survey conducted by Léger, the main challenges they will have to face in the next three years are recruiting and retaining staff, and technological change and competition.
In the near future, market competitiveness and accelerating information processing are issues for most businesses.
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Focussing on growth
Good news: Quebec SMEs were active enough in the past two years to ensure their growth in a context of increasing competitiveness. Accordingly, 62% of them carried out one or more development activities. The most common ones involved diversifying their product and service offering (37%), establishing strategic partnerships with other businesses (31%) and penetrating a new market (27%).
Some 8% of SMEs accelerated their development by carrying out an acquisition, a transaction that involves major challenges. These include integration ability – cited as a main challenge by 26% of acquiring companies – the implementation of a common culture and values (20%) and personnel management (17%).
International expansion was a growth method for 10% of businesses. More than half of them (55%) developed their presence in the United States, 47% in Europe and 15% in China. In most cases, the operation was successful: 79% of leaders stated that it had been profitable, and 21% even consider it very successful.
On the other hand, 10% of businesses that have not yet developed the international market plan on doing so within five years, a proportion that rises to 22% among companies with 100 or more employees.
Innovation
We often hear that innovation is at the heart of competitiveness. In this regard, 65% of companies consider their level of maturity to be fairly or very advanced compared to their competitors. However, 41% claim they don’t have the internal financial resources to develop innovation. In fact, half of the leaders say they are poorly informed about the financial resources available to support their efforts in this regard.
Digital shift
The survey also reveals that just over half of SMEs (57%) have not yet invested in the digital shift, even though it is their third most important issue. The most common investments are in cloud computing (17%), implementing or modifying computer programs (12%), and integrating management software (11%).
Accelerating information processing (for 51% of SMEs), client data security (43%) and the soundness of IT systems (35%) are also major technological issues, according to respondents.
While Quebec is positioning itself as a world leader in artificial intelligence (AI), one out of ten companies has already integrated AI technologies (6%) or plans on doing so in the near future (5%). Interestingly, in the construction sector, the proportion of Quebec companies that have already implemented artificial intelligence projects has risen to 20%, a possible indicator of the industry’s desire to breach its productivity gap.
Labour and organizational culture
Raised by 57% of SMEs, labour force issues are the main challenge for the next three years. To resolve this problem, Quebec companies are focusing entirely on training and skills development (83%).
In fact, more than half of the executives surveyed have created new training tools (61%), increased training expenses (57%) or implemented an employee development program (55%) over the past five years. Just over 40% of companies have also introduced continuing education incentives. These figures rise significantly among companies with 100 or more employees.
Social and environmental responsibility
One of the challenges faced by SMEs is the obvious need to adopt responsible practices. In fact, a high percentage of executives (90%) consider it important to do business with socially responsible suppliers.
Companies are already taking steps to achieve this. In the past five years, more than half of the SMEs surveyed have implemented actions to use less paper (83%) and fewer plastic or Styrofoam cups (71%), or to reduce their ecological footprint (53%). Four in ten companies (42%) introduced an environmental policy.
Furthermore, to contribute to the collective well-being, 46% of executives are involved as volunteers with an organization, and 22% of SMEs have a volunteer program that allows staff to volunteer their time to charitable organizations.
Inspirational successes
Do you recognize yourself in this survey because your company is facing one or more of these major issues? The success of outstanding leaders will inspire you to take on these challenges with flying colours.
To discover best practices in innovation, international expansion, corporate transactions and leadership, we invite you to read about the success stories of the Person of the Year Award finalists.
Study methodology: Telephone survey of 300 leading Quebec businesses with 10 to 499 employees, February 2019.