BMO Report: Canadian Small Businesses Plan to Take Advantage of Soaring Loonie

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TORONTO, ONTARIO--(Marketwire - April 14, 2011) - BMO Bank of Montreal today released results from a survey showing the top ways small businesses plan to capitalize on the strong Canadian dollar.

According to the survey conducted by Leger Marketing, entrepreneurs see an opportunity to upgrade and expand their businesses, as well as invest in their employees.

"Parity with the U.S. dollar represents a significant opportunity for Canadian entrepreneurs to enhance their productivity by upgrading or refreshing their equipment," said Cathy Pin, Vice President, BMO Commercial Banking. "A strong Canadian dollar provides additional purchasing power when importing this equipment and purchasing supplies and inventory from the global market."

The Leger survey also revealed regional differences, including:



-- Small business owners in British Columbia are significantly more likely
to expand into the U.S. and Mexico than those in Ontario and Quebec (21
per cent versus 9 per cent respectively).
-- Compared to the national average, entrepreneurs in Manitoba and
Saskatchewan are more likely to use the strong dollar to upgrade
processes, equipment and machinery (56 per cent versus 80 per cent), and
twice as likely as those in Alberta (80 per cent versus 40 per cent).
-- Small businesses in Quebec are the most likely to leverage the strong
dollar to increase staff (26 per cent), followed by Ontario (24 per
cent) and British Columbia (21 per cent).



Furthermore, the impact of the strong dollar will vary depending on the sector, presenting both opportunities and challenges for Canadian businesses. For example, utilities, broadcasters, sport teams and some retailers could benefit from a stronger currency, while manufacturing, tourism and some resource industries could face some difficulties as the loonie remains firm.

"We expect the Canadian dollar to appreciate modestly further and trade about five cents above parity against the U.S. dollar later this year in response to high commodity prices, rising interest rates from the Bank of Canada, and Canada's relatively good fiscal standing," said Sal Guatieri, Senior Economist, BMO Financial Group. "However, the currency will likely return to parity by late next year as a result of Canada's moderately high trade deficit and expected monetary tightening by the Federal Reserve."

Top Ways Small Businesses Plan to Take Advantage of Strong Loonie



-----------------------------------------
REGION
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National BC AB MB/SK ON QC ATL
----------------------------------------------------------------------------
Upgrading processes,
equipment, machinery 56% 58% 40% 80% 58% 60% 36%
----------------------------------------------------------------------------
Training current
employees 25% 37% 20% 10% 29% 14% 36%
----------------------------------------------------------------------------
Increasing staff 21% 21% 10% 0% 24% 26% 18%
----------------------------------------------------------------------------
Expanding my operations
across Canada 20% 37% 30% 0% 20% 17% 0%
----------------------------------------------------------------------------
Expanding my operations
into the U.S. or Mexico 9% 21% 5% 0% 9% 9% 0%
----------------------------------------------------------------------------
Expanding my operations
overseas 6% 0% 0% 0% 7% 11% 0%
----------------------------------------------------------------------------
Buy imported
products/have products
imported 6% 0% 0% 0% 8% 3% 18%
----------------------------------------------------------------------------

This chart is available as a graphic file (JPG) upon request.



The online survey was conducted by Leger Marketing between February 1 - 25, 2011, using a sample of 507 Canadian small business owners. A probability sample of the same size would yield a margin of error of +/-4.4 per cent, 19 times out of 20.

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Posted In: Press Releases
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