A priori, hairdresser Luc Vincent doesn’t have the profile of the typical techno entrepreneur at all. In 2018 he decided to “install himself on the web”, according to his expression, to sell his homemade hair products.
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“We were driving a little lost, but we had time to settle in,” explains the professional whose business is based in Vaudreuil-Dorion. When the pandemic came, it was a boom. We have gone from a turnover of a few hundred thousand to several million dollars. ”
Luc Vincent’s example perfectly illustrates the results of an unpublished study by the Business Development Bank of Canada (BDC), which will be unveiled on Tuesday morning. Based on two surveys of 2,069 Canadian small and medium-sized business managers, enriched by two econometric analyzes, this study establishes a close link between financial health and “technological maturity”.
“SMEs that invest in digital technologies outperform others,” sums up Pierre Cléroux, vice president and chief economist of BDC. It has been rumored for some time, but the study proves it. Those who invest more have stronger growth, are more resilient and export more. They also have less difficulty in obtaining funding. Well, that surprised us. ”
One in 20 ahead
In 2021, SMEs invested an average of $ 118,430 in digital technologies, but the picture varies enormously depending on the size of the company. Those with between 1 and 4 employees invested $ 48,243, while the largest, between 100 and 499 employees, are also the most ambitious in this regard, averaging $ 422,427.
First observation, just 5% of SMEs can be considered “advanced” in digital terms. We thus qualify companies that have implemented a series of measures, ranging from online sales to data analysis, including the digitization of business processes, the development of a digital plan and the design of a website. The BDC study evaluated the companies according to six “axes” which allowed for a classification into four distinct profiles.
It is by comparing these profiles with more traditional economic data that we have found that technological maturity is a very good indicator of financial health. Two tables, in particular, are eloquent.
The proportions are similar when it comes to exports: if 11% of latecomers have boarded, the percentage rises to 60% among the most advanced.
“We have had some success internationally,” says hairdresser Luc Vincent, whose company has about 15 employees. “Before the pandemic, we packed our bags in the basement with my wife. In 18 months we are in a 500 m2 warehouse. ”
“We see that there is a gap between companies that invest and those that don’t,” says Cléroux. Of the so-called “delays”, 33% experienced zero losses or growth. It is huge. It’s hard to make a profit when you’re not digitized at all. ”
There is also a direct link between technological maturity and the responsiveness of companies to take steps to stand out from the competition.
The least digitized sectors are personal services, construction, natural resources and wholesale and transport. At the other end of the spectrum, it is in retail and ICT (technology, information and culture) that we find the best scores.
We have also dissected the composition of the most advanced companies to know the profile of their owners. Women and people with disabilities are the least represented, while young people under 35 and indigenous people are among the most tech-savvy.
“We have no explanations, it is a simple observation”, explains the vice president of the Bdc.
Entrepreneurs were also asked what are the main obstacles to the digitization of their business. For 42% of them it is a problem of too high costs; 32% are concerned about cybersecurity; and 27% indicate uncertainties about the profitability of this transformation.
Rather unprecedented in such a study, an entire page is devoted to demonstrating, point by point, the low cost of the solutions offered in 2022. An entry-level website costs between $ 0 and $ 29 per month, a mid-range accounting system can be purchased between $ 11 and $ 48, and high-end customer relationship management will cost between $ 60. and $ 100 per month.
The question of high costs, Cléroux assures us, “is no longer true. We wanted to dismantle this myth, it is persistent.
The BDC, it should be remembered, is one of the major partners of the very recent Canadian Digital Adoption Program (PCAN), which targets around 160,000 SMEs within four years.
“It’s very easy when you have the right tools,” says Luc Vincent. Facebook, Shopify, they have it all, it’s plug and play. ”
Even BDC’s chief economist disagrees with an often-heard statement that digital transformation isn’t necessarily attractive to all types of businesses. “E-commerce tripled during the pandemic, as more and more consumers shop online, and when they don’t, they go online for information. If you are not there, you are not visible. ”
The studio also features a Winnipeg-based hairdresser, Praise Okwumabua, who, like Luc Vincent, started selling online before the pandemic and saw her sales soar when her shop closed its doors. “She is very creative. By putting videos on new ways of styling her hair, she has attracted customers, Mr Cléroux points out. The new generation wants to make appointments online, they don’t call anymore. ”