For small-business owners, innovation is always a priority. But when the fiscal future is uncertain, the focus turns to improving and developing current product lines, instead of creating new ones. According to a study by the quarterly American Express Small Business Monitor, bringing new products to the market is still a priority for 31% of business owners surveyed, but fully 43% identified improving their current product line as the most important factor in the future success of their company.
When it comes to business owners' confidence in their financial future, just over half (52%) report remaining hopeful, down five points from last quarter (57%). Only 38% report their business' current financial position is improving, down eight points since last quarter and down 11 points since the same time last year.
Even with a lack of absolute confidence in the financial future, business owners put a premium on research and development, spending an average of 11% of their total revenue on it in the last year with plans to increase its budget to 12.7% in the next year.
Despite the ongoing commitment to innovation, the survey revealed that even though Canadian small business owners are eligible for the federal government's Scientific Research and Experimental Development (SR&ED) tax credit, more than half (58%) have never heard of it. What's more, 28% have heard about the SR&ED tax credit, but don't apply, leaving significant money on the table (the average tax credit grant is $68,000).
"While it is positive to see SBOs investing largely in research and development, it is surprising to see the data reveal the complacence when it comes to taking advantage of financial breaks," says Athena Varmazis, vice president and general manager, Small Business Services at American Express Canada. "As a result, they are missing out on robust government resources that can help their businesses thrive."