WHAT THE NAY-SAYERS SAY

When asked about the economic future of the province and their business, most Alberta business owners were very optimistic. But there are 17% who fear the Alberta economy will be financially worse off six months from now. The reasons? One-third (33%) cited government decisions as having a negative impact, almost one quarter (24%) fear industry downturn, 16% predict poorer employment opportunities, one in ten (10%) believe the price of crude is worsening and 8% believe the global economy is worsening.

ATB BUSINESS BEAT:

The pulse on business in Alberta
Volume 2, June 2013

TO GROW OR NOT TO GROW

A further sign that Alberta business owners are generally feeling good about the future is that many have growth in mind for their company. Almost three quarters (73%) are intentionally trying to grow their business and 64% have had success. In the next two years: 53% are planning to purchase equipment/machinery 35% will focus on new IT infrastructure 33% plan to expand in domestic markets 30% will invest in commercializing new products or services 19% plan to purchase or build commercial real estate

Whats on Alberta business owners minds?

Google advertising, advertising online. In our business, being in flowers, people who want to send flowers do not go to the Yellow Pages, they go onto Google and type in florists in Calgary.
General Manager, Retail Flower Shop, 1-4 employees, 17 years in business, <$1MM in revenue

In May 2013, ATB surveyed randomly selected small and mid-sized enterprises (SMEs) in Alberta. SMEs represent 99.9% of business in the province as only 0.1% of all Alberta businesses have 500 or more employees. The rest are small with fewer than 50 employees or mid-sized with 50 499 employees. This quarter, The ATB Business Beat dives deeper into the pain points that plague SMEs, while continuing to check in on the confidence of Alberta business owners regarding the economy, future of their business and their propensity for growth.

LABOUR WOES
When we last surveyed SMEs in January of this year, they spoke about labour difficulties in this province. And it should come as no surprise with unemployment at 4.4%*. This quarter, two-thirds (67%) somewhat or strongly agree that finding experienced labour is challenging for them. Top five challenges with finding experienced labour:
sHORtaGe OF sKiLLeD LabOuR

About This Report

For more information on this report or the next ATB Business Beat, please email businessbeat@atb.com or visit atb.com/businessbeat to join the mailing list.

About NRG Research Group

NRG Research Group (www.nrgresearchgroup.com) is a leading Canadian public affairs and market research company with offices in Calgary, Vancouver and Winnipeg.

They just arent out there. We just arent finding the skilled journeymen we need.

About ATB Financial

ATB Financial (atb.com) is the largest Alberta-based financial institution, with assets of $33 billion. ATB offers retail financial services, business and agricultural financial services, corporate financial services and investor services to more than 654,000 Albertans and Albertabased businesses in 242 communities. ATB Financial Business and Agriculture provides services to Albertas small and mid-sized businesses, farmers and other agriculture customers. To find out how ATB Financial can help your business grow, please contact: Wellington Holbrook, Executive VicePresident, Business & Agriculture, ATB Financial at askwellington@atb.com

Who did we talk to?

These findings are from an ATB Business telephone survey conducted during May 1 to 15, 2013, with 303 randomly selected Alberta SMEs owners/operators. Study exclusions: agriculture (farms or ranches), government, financial institutions and large businesses (500+ employees). Business size definitions: small (0 to 49 full-time employees) and medium-sized (50 to 499 full-time employees).

VP, Construction Company  5-19 employees, 5 years in operation, $1MM $3MM in revenue

We need people skilled in technical skills with computers.

CFO, Real Estate business

 50-99 employees, 100 years in operation, $10MM $15MM in revenue

Quality in workers. In my business you have to be skilled at equipment operating and its hard to find a skilled laborer.
Managing Director, Energy/Oil & Gas business  1-4 employees, 3 years in operation, <$250K in revenue

*Source: Statistics Canada,The Daily, May 10, 2013 and CANSIM table282--0087

44% 37% 20% 19% 13%

saLaRY eXPeCtatiOns aRe tOO HiGH

CannOt COMPete WitH COMPetitiOn

PeOPLe DO nOt Want tO WORK

Business LOCateD in a sMaLL COMMunitY/ RuRaL/ ReMOte aRea

HANGING ON TO EXPERIENCED STAFF

Over one-third (35%) of Alberta SMEs find that retaining experienced staff is difficult. When probed further, over half (52%) of them cited salary expectations are too high, 27% said they could not compete with the competition, one in five said people do not want to work, 13% said there is a shortage of skilled labour and another 13% said people leave for other jobs.

THAT PESKY COMPETITION

What SMEs say the top challenges are when it comes to competition for business:

Well #1 is the salary we can afford as a grocery store versus the industry in the area. The others can afford to pay much more than we can afford to pay in the service industry.
Owner/Operator, Grocery Store

 5-19 employees, 36 years in business, $3MM $5MM in revenue

battLe PRiCe COMPetitiveness

30% 16% 12% 10% 8%

CannOt COMPete WitH tHeiR COMPetitORs biG MaRKetinG buDGets stRuGGLe FinDinG eMPLOYees saiD PRODuCt OR seRviCe COMPetitiOn is FieRCe

saiD it is HaRD tO COMPete WitH tHe biG GuYS

Because were in an area that has a very high employment and very high wages, for not even skilled labour, but just anybody. It is getting a little easier with the downturn with the oil and gas industry, but its still a tight labour market in our area.
CEO, Transportation & Warehousing business

 20-49 employees, 33 years in operation, $3MM $5MM in revenue

Youve got Wal-Mart and Staples. Pricing of my product is a tough sell.

15 years in business, <$250K in revenue

Owner, IT & Computer Sales/Service (sole proprietor)

OPTIMISM CONTINUES TO REIGN HIGH EXIT STRATEGY

In the next five years, 34% of SMEs plan on exiting their business, yet more than half of them (52%) do not have a succession plan. Nearly three in ten (27%) mention one of the following reasons as to why they do not have a succession plan: No time to deal with the issue Have not thought about it Dont know where to start It is too far in the future Have not decided what to do with business What about the other half (48%) who do have a plan? They are considering the following options: 48% hope to sell the company to a third party 3  5% are considering selling to existing management or other employees 1  7% are looking to sell or transfer to a family member 17% will simply wind down or close the business This last statistic is concerning. With proactive succession planning, more of these companies could be encouraged to successfully transition their business, thereby maximizing the potential value and not negatively impacting economic activity or employment. Almost three in ten (29%) of the SMEs we surveyed are 55 years of age or older, and of those, more than half (55%) do not have a succession plan, and that could be because many of them have no plans to leave anytime soon. Over one-third (35%) of the baby boomers with no succession plan say they, have no plans to let go of the business. More than three quarters (77%) of Alberta SMEs believe that Albertas economy will be the same or better off in the next six months. Thats up a percentage point from last quarter.

Of the 35% who said the economy will be better off:

11%
believe the industry they are in is improving

have experienced improved sales

36%

13%

see the global economy recovering

SMEs are more optimistic about their own companies too, with 89% believing their company will be the same or better off in the next six months. Thats an increase of 2 percentage points over last quarter.