Most Canadian small- and medium-sized businesses have adjusted their business strategies over the past year in anticipation of a recession and are now feeling more optimistic about their growth ambitions, finds anew KPMG in Canada survey. Although new challenges have emerged, nearly nine in 10 (88 per cent) businesses are confident their company will grow over the next three years, up from 83 per cent in 2022, and noticeably higher than the confidence levels of CEOs of large corporations (80 per cent).

The KPMG Private Enterprise™ Business Survey of 700 companies reveals that recession worries mobilized leaders to take proactive steps to make their business more resilient. These wide-ranging efforts have included improving operational efficiencies (37 per cent), cutting business costs/expenses (41 per cent), reducing headcount (26 per cent) and temporarily halting large expenditures (30 per cent).

“Canadian business leaders took decisive action over the past 12 months to prepare for a potential recession by making their businesses smarter, leaner and more efficient,” says Mary Jo Fedy, National Leader, KPMG Private Enterprise. “Although many small- and medium-sized businesses are in a stronger financial position as a result of their actions to withstand a recession that hasn’t materialized, they are now staring down new pressures and interrelated risks. By investing the recent gains they have made into solutions to reduce these threats, they will be on an even more solid footing for future success.’’

Key poll findings

  • 86 per cent of SMB leaders say their company is in a better position today because of the steps they took in anticipation of a recession
  • 82 per cent believe the actions they took to prepare for a possible recession will reap productivity gains, but it could take some time due to inflation (e.g. higher input, labour and financing costs)
  • 83 per cent say cost and investment pressures on their operations (e.g. decarbonization, technology, cybersecurity, etc.) are more concerning than a recession

Despite the high level of confidence, SMBs are seeing a complex web of emerging risks. Cybersecurity, disruptive technologies, energy security and climate change are weighing on leaders as they pursue their growth plans.

Top risks over the next three years en

Heightened cyber risks

Cybersecurity ranks as the number one risk, with 63 per cent reporting their business has been the target of a cyberattack. “When compared with large corporations, small- and ‘mid-sized enterprises are feeling more vulnerable to rising cyber threats and the growing sophistication of cyber criminals. More than ever, they need to prioritize investments in cybersecurity to close this gap and build internal capacity to guard against these incidents,” adds Ms. Fedy.

Emerging technology: AI and the talent factor

The vast majority of leaders recognize that digital transformation reduces or controls costs, enhances operational efficiencies and improves the client experience. However, many are still searching for individuals with the skills needed to fuel growth, leverage continuing technology investments and adapt their workforce to the new economy.

Even with the influx of skilled immigrants to Canada, a vast majority (84 per cent) are not finding the talent to match their needs. Nonetheless, the latest job numbers continue a positive trend, with employment growth averaging 30,000 new jobs a month since the beginning of the year, according to Statistics Canada.

“Most companies are now actively recruiting to find people with the right skills to operationalize their technology investments, particularly as emerging technologies disrupt the market,” says Dino Infanti, KPMG Partner and National Leader, Private Enterprise Tax. “With AI now the focus of the digital conversation, leaders are grappling with how best to accelerate its adoption and upskill their workforce to expand and grow. By harnessing transformative technologies like AI, Canadian companies can improve productivity and stay competitive with their U.S. and global peers.”

Investing in business transformation

Energy security and climate realities

Climate change is impacting Canadian SMBs dramatically this year. The effects of extreme weather events (e.g. wildfires, floods, tornados) and higher energy prices are hurting businesses and adding to cost pressures. Over half (54 per cent) say their costs rose significantly due to extreme weather impacts.

“With Canada’s clean energy transition ramping up and climate realities arriving on the doorstep of businesses across the country, climate resiliency and decarbonization have taken on added urgency. To subsidize these efforts, nearly seven in 10 leaders say they expect to use federal green tax credits, which will likely shape future energy and investment decisions,” says Mr. Infanti.

Additional findings

  • 67 per cent plan to use the new federal ‘green’ tax credits for clean electricity, clean hydrogen, clean technology and/or carbon capture
  • 61 per cent say these tax credits are influencing/determining their future business plans and investments (e.g. clean tech manufacturing, carbon capture systems)

Looking ahead

As Mr. Infanti acknowledges, “not every company is thriving. For a much smaller proportion of businesses that are struggling to make the necessary adjustments and adapt, this year will be a test of their ability to get back on track. Every business is in a different financial situation and should consider conducting a thorough analysis of their cash flow, operations, tax strategy and climate impacts.”

About the KPMG Private Enterprise™ Business Survey

KPMG in Canada surveyed business owners or executive level C-suite decision-makers at 700 small-and-medium-sized Canadian companies between August 30 and Sept. 25, 2023, using Sago’s premier business research panel. Eighty-two per cent of the SMBs surveyed are privately held and 18 per cent are publicly traded. Forty-one per cent are family-owned businesses. A quarter of the companies surveyed have more than C$500 million and less than C$1 billion in annual revenue, a quarter have more than C$300 million and less than $500 million in annual revenue, 23 per cent have between C$100 million and C$300 million in annual revenue, and 26 per cent have between C$10 million and C$50 million in annual revenue. No companies were surveyed under C$10 million.

About KPMG in Canada

KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.

The firm is established under the laws of Ontario and is a member of KPMG's global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see

For media inquiries, please contact:

Nancy White
National Communications  & Media Relations
KPMG in Canada
(416) 876-1400