BDC study: Strong online presence drives growth

Growing a business online results in higher revenues, direct communication with customers and easier access to global markets, according to a new study released in July by the Business Development Bank of Canada (BDC).

The study indicates that although being online fuels growth, only four out of 10 Canadian small and medium-sized enterprises (SMEs) with an online presence sell, receive and take orders online. Consequently, 60 per cent of Canadian SMEs are missing huge growth opportunities.

“Still too many Canadian entrepreneurs leave money on the table for grabs by Canadian and foreign online competitors. Considering worldwide retail e-commerce sales are expected to double between 2018 and 2021, it is vital that Canadian business owners take their digital presence seriously,” says Pierre Cléroux, vice-president, Research and Chief Economist at BDC. “A strong online presence should be at the heart of any business that wants to continue growing and remain competitive.”

The study is based on a survey of 1,485 Canadian businesses with an online presence and with national or international activities. Although most Canadians are buying online, close to half of all Canadian SMEs didn’t have a website in 2017, according to Statistics Canada.

Growing online: Worthwhile but challenging

The study finds that businesses building a market expansion strategy on top of an online strategy are more likely to enjoy higher revenues and profit growth. They are also close to three times more likely to export. However, SMEs face a variety of challenges when growing their business online, such as data protection and security (32 per cent), lack of knowledge of Internet technologies (25 per cent) and the difficulty of hiring and retaining qualified talent (24 per cent).

Only 15 per cent of respondents identify the cost of setting up an online store as their top challenge. Businesses that expand online spent on average $37,458 on their website and $29,210 on their online marketing in the last three years. Larger businesses tend to spend seven times more than smaller businesses to optimize their online presence.

Planning is key

“The first step in expanding online into new markets is to get your online strategy right. Then, you can build your market expansion strategy on top of it,” says Philippe Desjardins, business advisor at BDC Advisory Services.

“As in many business opportunities, planning is the best way to achieve long-term, sustainable success and avoid common pitfalls.”

The study also identifies six online practices businesses can follow when expanding to new geographic markets: 1. Measure your business’ website performance 2. Improve your visibility with search engine optimization 3. Invest in search engine marketing 4. Continually tweak your website to meet customer expectations 5. Make your online expansion plan the core of your strategic plan 6. Personalize it with customization CI

Source: Business Development Bank of Canada. bdc.ca

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