SMBs in Canada show strong confidence in future growth, but leaders face challenges from economic uncertainty
The 2024 KPMG CEO Outlook reveals that while Canadian business leaders maintain confidence in their organizations' future, they face growing pressure to meet long-term goals.
According to KPMG, 76 percent of Canadian CEOs remain confident in their company's three-year growth prospects, while 83 percent express optimism about the Canadian economy.
However, 76 percent also report feeling heightened pressure to ensure their business's long-term prosperity.
Small- and medium-sized businesses (SMBs) show even higher levels of confidence. KPMG Canada’s recent survey reveals that 92 percent of SMB leaders are optimistic about their company’s three-year growth outlook, and 88 percent feel positive about the domestic economy.
Yet, 86 percent admit they also experience increasing pressure to secure their company's future.
Global CEOs express a similar sentiment to Canadian CEOs, with 76 percent feeling confident about their companies. However, confidence in the global economy is lower, with only 72 percent of global CEOs and 69 percent of Canadian CEOs expressing optimism.
Operational risks, cybersecurity concerns, and environmental challenges are top issues that could derail Canadian CEOs’ growth plans. Global CEOs similarly point to operational risks, supply chain concerns, and cybersecurity.
Meanwhile, Canadian SMBs identify cybersecurity as their primary concern, followed by emerging technologies and energy security.
The uncertainty surrounding a soft landing in the economy also weighs on Canadian business leaders. 59 percent of Canadian CEOs, compared to 53 percent globally, view economic uncertainty as their main challenge.
Among SMBs, 26 percent share this concern, along with nearly a third (31 percent) who worry about growing protectionist attitudes in certain markets. In contrast, only 19 percent of Canadian CEOs and 14 percent of global CEOs see protectionism as a concern.
Canadian CEOs are also focused on environmental, social, and governance (ESG) priorities. Half of them (50 percent) believe they are ready to meet the expectations of stakeholders regarding ESG, a better position than their global counterparts, where only 34 percent feel similarly prepared.
SMB leaders, however, rank ESG fourth in their list of priorities, tied with inflation-proofing, while their main focus remains on implementing generative AI.
Canadian CEOs have already begun investing in new technologies, with 59 percent identifying generative AI as a top investment priority.
However, this is a decline from the 75 percent who ranked it as a priority last year. SMBs, after initially taking a wait-and-see approach, are now catching up, making AI their top operational priority.
Tim Prince, managing partner at KPMG in Canada, explains that leaders are focusing resources on growth and productivity.
“Canadian business leaders are well aware that they will need to continuously improve their operations, decarbonize their operations, and upskill their workforce to compete in a world that’s getting tougher by the day.”
Talent remains another concern, as Canadian CEOs and SMB leaders focus on their employee value propositions. 84 percent of SMB leaders expect the labour market shifts to impact their organizations, specifically through retirement and the lack of skilled workers.
In contrast, only 28 percent of Canadian CEOs share these concerns, although 79 percent agree that companies should invest in skills development and lifelong learning.
The push for a return to the office is another focus for Canadian CEOs, with 83 percent expecting a full return-to-office within three years, up from 55 percent in 2023. Nine out of ten say they plan to reward employees who return to the office with favourable assignments or promotions.
SMB leaders, however, anticipate a more hybrid workforce, with only 20 percent expecting a full return to the office.
Despite this, 85 percent of SMB leaders are willing to offer rewards to encourage a return, though 65 percent expect that hybrid work arrangements will remain essential for talent attraction and retention.
