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Small Business Briefing

Low interest rates spur investment plans Add to ...

The latest news and information for entrepreneurs from across the web universe, brought to you by the Report on Small Business team. Follow us on Twitter @GlobeSmallBiz

Despite economic uncertainty, investment looking up

Two out of three Canadian business owners are planning to invest in their companies over the next two years, according to the 2011 RBC Small Business Survey conducted by Ipsos Reid. The bulk of the funding will go toward equipment (37 per cent of respondents), technology (29 per cent), new products and services (28 per cent), and employee hires (11 per cent).

“Low interest rates are a driving factor," said Mike Michell, national director of small business at RBC, "as well as increased business-owner awareness that future growth and competitiveness depend on investments today. In fact, seven-in-10 business owners are confident that the equity they are building in their companies will help them meet their future goals.”

For the past two years, one in three small-business owners said they have not invested in technology, new equipment, new products or services and human resources. Economic uncertainty (37 per cent), lack of need (32 per cent), and a dearth of capital funding (11 per cent) were cited as the main reasons.

The survey of 1,400 entrepreneurs was conducted from July 29 to Aug. 8. It is considered accurate within plus-or-minus 3 per cent, 19 times out of 20.

As part of the findings, the bank also offered three tips:

Invest in yourself – and ask others to do so

Use your savings and investments, find potential investors, including family, to buy shares of your business, or reinvest the profits back into your company. This is the least expensive option for building equity, and making a strong personal investment can make it easier to secure future financing from a bank or other lenders.

Secure short-term financing

An operating line is ideal for those starting a business, or for seasonal firms with fluctuating cash flow. It typically takes a year to pay back, so it’s useful for immediate needs, such as supplies, inventory and payroll.

Arrange long-term financing

A term loan or leasing is ideal for big-ticket items, such as vehicles, or office renovations, and it has a longer repayment term, usually one to five years.

Craft brewers are the bright spot

The Beverage Information Group has reported in its 2011 Beer Handbook that U.S. beer sales have declined for the fourth consecutive year, with the latest figures showing a 1.9-per-cent drop to 2.8 billion cases. The group attributes the findings to the 'light' segment, which has lost momentum from its core brands, with only pockets of growth from newly introduced line extensions. However, the craft brewing segment reports high profits, and imports gained 0.9 per cent to 362.8 million cases last year. Beverage Information Group's information services manager Eric Schmidt told Drinks Business Review that the super premium, specialty, and flavoured malt beverage category has benefited from the craft sector's growth.

CFIB doesn't want to 'Buy American'

The recent proposal to include ‘Buy American’ trade restrictions in the draft American Jobs Act of 2011 runs contrary to a long-standing, shared commitment by the Canadian and U.S. governments to free and open trade, says Catherine Swift, president of the Canadian Federation of Independent Business (CFIB). "Protectionist policies like this have never been shown to be effective," she explains in a press release, "and indeed will end up punishing U.S. consumers by imposing higher prices at a time when consumers are already beleaguered by a difficult economic climate.” The organization will continue to promote policies that support open trading relationships, and it is of the belief that if the U.S. proposal is enacted, it will send negative signals to other governments that restrictions are a good policy choice.


Tips for potential exporters

Are you thinking of exporting but don't know where to begin or what's involved in such a venture? A seminar in Winnipeg on Tuesday will discuss the benefits and challenges of exporting, export opportunities; being export-ready, and how to secure financing. The event, featuring speaker Daria Gawronsky, business and trade services officer of the Canada/Manitoba Business Service Centre, runs from 1 to 3 p.m.

Get back to business over drinks

Networking Entrepreneurs Montreal presents its Back 2 Business networking and cocktail event on Sept. 22, 7 p.m., at Koko Restaurant & Terrasse in the Opus Hotel. You'll have the chance to socialize with other entrepreneurs, professionals, and "socialites" over drinks and hors d'oeuvres, in a relaxed networking environment.


The challenges of being a young entrepreneur

While young entrepreneurship is on the rise, and many firms are headed by fresh-faced bosses, their age can sometimes create problems and cause them to meet resistance. Just because of how old they are, or how old they look, some entrepreneurs may face assumptions about their competence from customers or suppliers, and others may have difficulties with employees working for a boss decades their junior. They may also have to overcome financing obstacles, as financial institutions balk at their lean ages and credit histories. Some find people just don't take them seriously. Diane Peters examines what they can do to tackle these challenges head on.


How to deal with older clients

In part three of a Talking To Entrepreneurs video interview segment from February, 2011, the founder of Redwood Strategic, Dave Wilkin, explains how he deals with clients who say he's too young or inexperienced. Here are links to parts one and two.

Got a tip on news, events or other timely information related to the small-business community? E-mail us at yourbusiness@globeandmail.com

Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT


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