Small business confidence deserves closer analysis

by Shane Schick

When things look bleak, we tend to say that “no news is good news.” When things start looking up, on the other hand, good news is sometimes treated as if it’s not news at all.

Consider the spate of perfunctory coverage devoted to the Canadian Federation of Independent Business (CFIB) recent Business Barometer Index, which showed more small businesses expressing confidence about their prospects in the months ahead. After some downward trending due to worries about foreign markets, the CFIB reported a return to “near normal” levels, meaning that overall, SMBs expect to see stronger performance for 2012. The mainstream media regurgitated the bare bones of the story, but it’s worth taking a closer look at where the confidence is coming from, and what the remaining challenges are.

The CFIB actually offers a much more detailed report for free on its Web site, and the numbers are interesting. While 45 per cent of SMBs described the state of their business as “satisfactory” and another 41 per cent said “Good,” the biggest business constraint cited was insufficient domestic demand. This has been a complaint we’ve heard multiple times from GTA tech startups at our Technicity.ca event over the last two years. It’s also an area where technology can help: while our research has shown little interest in social media from SMBs, it’s a great medium to connect more intimately with local prospects, while investments in customer relationship management (CRM) suites for SMBs may help nurture new business leads.

Sometimes technology investment seems like a necessary evil to SMBs, but the CFIB Business Barometer Index indicates that’s not the case in 2012. Projected capital spending in computers and technology is stable at about 35 per cent, and only 19 per cent of SMBs cited technology as a major cost concern. That could reflect a deepening maturity in how to allocate technology resources effectively. When you look at the biggest cost concern – fuel and energy – technology may play a role here too, with the advent of smart metering systems and other so-called green IT.

SMBs should look at these kind of research snapshots as a sort of mirror to their everyday business reality. If what the CFIB is showing doesn’t reflect what’s going on in their organization, it’s worth thinking about why, and what role IT might play. In some cases – taxation, baking fees – there may be nothing. In others, technology could be a differentiator. One possible SMB goal for the new year? Be the organization whose performance skews the numbers in the next Business Barometer Index – but in a way that demonstrates success.