According to a report released by Export Development Canada (EDC), exporter confidence for Canadian businesses fell in 2014. Their report measured how Canadian exporters and investors are feeling about international and foreign business opportunities in the next six months. The data is collated and measured with the Trade Confidence Index (TCI), which summarizes the state of Canadian export confidence. In December 2014 Canadian TCI fell by 1.4 points to 75.8 after three consecutive increases. Despite the slip, export confidence remains high for Canadian businesses.
Canadian businesses that are moving towards exports or increasing their exports have many favourable conditions to leverage including a strong supporting infrastructure, tax incentives, international trade incentives, and government funding opportunities.
Barriers to Exporting
Canadian small businesses face several key barriers to exporting. Many small businesses are unable to support exports, leverage existing opportunities, or develop new international opportunities for a variety of reasons. These include:
- Increased cost of foreign marketing activities: entering export markets requires significant marketing expenditures to develop and launch market relevant campaigns. These costs can include foreign translation, print materials, and international brand development.
- Market development activities: many businesses are unable to enter new markets due to high regulatory and certification costs. Businesses may need to adhere to different international or local regulations – which can be a costly and time intensive process.
- Capacity: small businesses may not have the internal capacity to leverage export market developments. Increasing capacity may require capital equipment investments that are costly and negatively impact cash flow.
- Staffing: Canadian small businesses may not have the adequate staff to support export developments. They may not have the sales, marketing, or operations staff to support increased production and foreign development demands.
Starting to export can be a very difficult and costly process, and this may lead small businesses to focus their energies elsewhere. Despite the possibilities and opportunities offered by the international market, many small businesses lack the tools or knowhow to build their business outside of Canada. However, through cash flow and capacity planning many businesses can overcome export barriers and grow their business internationally.
Pre-planning and developing a clear market entry strategy are necessary to ensure the business is aware of market differences, potential regulatory/certificatory concerns, duties/tariffs, or other extra costs of doing business in foreign countries. Luckily for Canadian small businesses, there are many channels of support. Businesses can leverage a range of funding programs and expertise to build their export markets.
Many small businesses are eligible for a variety of export-oriented government funding programs. These programs can support different initiatives and reduce the costs of entering or growing international markets. Additionally, small businesses can consult with government agencies and export-oriented support businesses (such as the Canadian Digital Media Network, Export Development Canada, and the Ministry of Economic Development, Employment, and Infrastructure). Funding programs include support for:
- Foreign market development activities: up to $30,000 in support for trade shows, sales visits, export market research.
- Capital equipment: up to $100,000 for capital equipment that will improve productivity and increase exports
- Human resources: up to $80,000 to cover up to 50% of the costs associated with hiring an Export Manager
Attend a Workshop or Webinar to Learn More
To learn more about how to leverage government funding to increase your exports, sign up for one of Mentor Works’ free workshops or webinars. The schedule is frequently updated, and you can check our list of upcoming events for more information. Our next export webinar is on January 12 at 11:30am focusing on capital equipment funding, register for the free webinar and learn more.
Sign up for our government funding e-newsletter to stay on top of funding opportunities and get the latest information on government funding.