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Confidence of Northern business owners exceeds national levels.

Business owners in Northern Ontario are for the most part satisfied with their company's performance over the last six months. As for their future, less than 10 per cent indicated a downward trend in both their profitability and overall financial position. This statistic bodes well for small- and medium-sized businesses in the North.

A recent study conducted throughout the months of September and October found that 80 per cent of business owners in Northern Ontario achieved a return on their investment either as expected or higher than expected over the prior six months.

The Small Business Counseling Service, located in the school of commerce, Laurentian University in Sudbury, conducted the survey in order to inform business owners in Northern Ontario about the general outlook for business in the North. The survey polled 100 business owners in eight Northern Ontario centres about their firm's financial position and expected capital expenditures over the next six months. As well, business owners were asked about expectations regarding overall economic conditions in Canada.

The list of business owners was obtained through the chamber, of commerce Web sites available for each city. The questionnaire and methodology were obtained from the Conference Board of Canada. The Conference Board conducts this questionnaire nationally to obtain a measure of business confidence levels on a quarterly basis.

As can be denoted from the graphical depiction; the Conference Board's Business Confidence Index followed a fairly uniform pattern prior to the dip in the third quarter of 2001, where the index was calculated to be 93.0. This was a low figure not seen since the 90s. The downturn is likely due to the uncertainty resulting from the aftermath of September 11th. The good news is that there was an upward trend from 2001 to 2002, however market skepticism and an impending war with Iraq is once again driving business confidence down in the third quarter of 2002. Since confidence levels are not as high as 2000, the index implies that business owners are cautiously waiting to see how the global economic effects will play a role in their individual businesses and industries.

Locally, Northern Ontario businesses generally feel the same way. The Conference Board's national index for the third quarter of 2002 is 129.7. The index the Small Business Counseling Service calculated for Northern Ontario business confidence levels is 133.6. In comparison, it appears business owners in the North are slightly more confident than the rest of the country, however, it is important to note that the margin of error could account for this difference.

Of those polled, 93 per cent of firms remain confident that their financial position would either improve or continue at the same level over the next six months. Ninety-one percent indicated that their overall profitability would mimic their financial position.

As to whether the present is a good time or bad time to undertake expenditures, responses were conflicting. While 40 per cent indicated that it was a good time to undertake expenditures, 35 per cent cited that it was a bad time to do so. This could explain why 40 per cent of those polled stated that they were operating slightly below capacity.

With respect to the nation as a whole, 74 per cent of Northern Ontario business owners remain confident that overall economic conditions in Canada will remain the same or improve. Furthermore, the firms do not expect price inflation as they predict prices to increase buy an average of 2 per cent per year.


Ryan Merkley is a consultant for the Small Business Counseling Service at Laurentian University in Sudbury. The SBCS performs market research, business planning, accounting services and promotional planning for small businesses throughout Northern Ontario. For further information call (705) 675-1151 ext. 2170.
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Author:Merkley, Ryan
Publication:Northern Ontario Business
Date:Jan 1, 2003
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