Canadian small and medium-sized enterprises (SMEs) remain optimistic about their growth potential despite facing significant challenges in technical expertise, according to PayPal’s 2024 Business of Change Report. The report, which surveyed 500 small business owners across Canada, reveals that nearly half (47%) of Canadian online SMEs have not expanded in the past three years, largely due to a lack of technical skills. However, 82% of these businesses believe they can achieve decent growth with the right strategies.
The report highlights that 59% of SMEs feel their growth is limited by a lack of technical expertise. Despite this, 63% of online businesses plan to expand in the next one to two years. These enterprises recognize the importance of investing in technology and Artificial Intelligence (AI) skills to keep pace with the rapidly evolving online environment, with 70% of SMEs acknowledging the need for such investments.
Several barriers to growth identified by Canadian SMEs include a challenging economic climate (42%), intense industry competition (36%), and reduced consumer spending (32%). Additionally, internal factors such as lack of business confidence and skills also pose significant challenges. Nearly half (48%) of respondents find acquiring new customers difficult, while more than a third (33%) struggle with boosting customer conversion rates, and a quarter (24%) face cashflow management issues. Furthermore, one in five SMEs (19%) are uncertain about which payment methods to offer, such as installment payment options and various digital wallets.
Despite these obstacles, Canadian SMEs remain hopeful about their future. More than half (61%) of online small business owners believe that the future of business in Canada is promising. Many SMEs are looking beyond domestic borders to compete on a global scale, with 42% expecting an increase in international sales this year. This is supported by 40% of respondents who reported that cross-border sales contributed to revenue growth in the past year.
Recognising the importance of providing diverse payment options, 63% of SMEs believe offering more payment choices will help convert prospects into customers and grow sales. To manage these transactions effectively, 80% of SMEs emphasise the need for a comprehensive suite of solutions through a single integration, ensuring a strong and user-friendly platform both on the front and backend.
Reflecting the belief that digital transformation is key to future growth, 70% of SMEs plan to invest in technology and AI skills. In 2024, many Canadian SMEs will focus on improving their online and social media sales, with 51% planning to enhance efforts in these channels to foster growth. Other areas of targeted investment include online marketplaces (39%), international sales expansion (28%), and reinforcing online security and payment methods (17%).
Recent research has shown a significant increase in cybersecurity incidents in Canada, with over 70,000 incidents reported in 2023, marking a 25% increase from the previous year. Nearly half (46%) of SMEs do not feel adequately prepared to protect their businesses and customers from fraudulent transactions, and 43% are concerned about managing and protecting customer information online.
Despite facing technical skills challenges, Canadian SMEs are optimistic about their growth prospects. By investing in technology and AI, improving online and social media sales, and ensuring robust security measures, these businesses are poised to overcome barriers and thrive in the rapidly changing online environment. For more information on PayPal’s suite of online payment solutions for small businesses, visit PayPal Canada.
