Optimism Abounds: Canadian Businesses Look Forward to Growth in 2024 – Unveiling Key Factors

The challenging environment poses significant challenges for Canadian small to medium-sized businesses (SMBs), as they grapple with higher interest rates, escalating inflation, recession concerns, and geopolitical uncertainties. The convergence of these factors creates a daunting outlook for the year, prompting SMBs to navigate through economic uncertainties and potential financial strains.

Contrary to the overall grim scenario, research by Zoho Canada over the past year presents a contrasting perspective. Surveys of thousands of small business owners in Canada indicate a wave of optimism among Canadian SMBs. Approximately 75 percent of respondents in last year’s survey expressed an expectation of growth ranging from one to 20 percent in the upcoming year. This suggests a resilient and positive outlook among small businesses in the face of economic challenges.

Chandrashekar Lalapet Srinivas Prasanna (LSP), managing director of Zoho Canada, attributes the optimism observed among small businesses to their resilience and adaptability. Despite facing turbulent times, companies have shown a remarkable ability to address challenges effectively. In a recent interview with BetaKit, LSP delved into the factors driving this optimism and shared insights on how SMBs can maintain resilience in the face of ongoing macroeconomic challenges in 2024.

In 2020, the onset of the pandemic prompted Canadian businesses to swiftly adapt to a new operational model. Technology played a crucial role in this transformation, as evidenced by McKinsey’s research, which revealed that the pandemic accelerated businesses’ digital transformations by three to four years within a few months. According to LSP, small businesses faced a choice between going out of business or embracing discipline that would enable them to thrive in the new landscape.

Zoho Canada’s research revealed the significant impact of digital transformations, with half of the respondents indicating that their initiatives were successful and improved profitability. LSP highlighted that the pandemic compelled businesses to adopt technology, emphasizing the risk of obsolescence for those who resisted.

The data showed ongoing emphasis on technology adoption by SMBs, encompassing collaboration platforms for remote work, AI systems for automation, and BI and CRM tools for enhanced operational and customer insights. Zoho’s suite of software products has experienced a surge in usage over the last four years, reflecting the success of these technological shifts.

Despite widespread layoffs in Canada’s technology industry over the past year, recent indicators suggest a shift toward expansion. Zoho Canada’s data reveals that 30 percent of Canadian SMBs plan to recruit new employees, 64 percent anticipate maintaining their current workforce levels, and fewer than 10 percent expect staff reductions. LSP noted that the recent wave of layoffs has increased the availability of talent, creating opportunities for SMBs looking to grow their teams. The situation has shifted the dynamics in the talent market, providing businesses with a pool of skilled professionals seeking new opportunities.

Canadian SMBs are prioritizing talent retention, with over three-quarters of respondents implementing measures like raises, more benefits, flexible vacation, and hybrid work to retain staff, according to Zoho Canada. Although employees prefer remote work, LSP highlighted the challenges of transitioning to a fully remote model for growing teams, emphasizing the importance of understanding the organizational culture and fostering learning that occurs through osmosis. The balance between remote and in-person work is crucial for maintaining a strong company culture while accommodating employees’ preferences for flexibility.

While the 2024 outlook for Canadian SMBs is positive, concerns about cash flow and the economy persist, with more than 50 percent of respondents believing they’ll need to do more with less in 2024, according to Zoho Canada. Despite challenges, close to 70 percent of respondents would encourage others to try entrepreneurship. LSP emphasized the importance of building resilience into organizations by closely monitoring cash flows, staying flexible, and embracing innovation. Technology plays a crucial role as an enabler of progress, empowering businesses and individuals to achieve their fullest potential in an ever-evolving business landscape.