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The 6th annual RBC Schulich Enterprise Forum featured a panel of leaders in business, education and government affairs. Through incisive questions, the panel explored the trends of 2020, opportunities for Canadian SMEs, and the risks that must not simply be overcome, but embraced in order to thrive.

The Schulich School of Business is rated among the world’s leading business schools and has a long-standing commitment to global business. Its Centre for Global Enterprise was launched in 2013 to help Canada’s small- and medium-sized businesses compete internationally, and the annual forum was introduced as a way to present thought-leadership on relevant issues. RBC is a founding member of the centre and sponsor of the forum

“While we have heard sobering news headlines from struggling businesses, we are so proud to hear from business clients countless inspiring stories where resilience and entrepreneurial spirit have created new chapters of growth and optimism – for their own businesses and Canada’s economic future,” said Sue Noble, Senior Director of Client Segments in Business Financial Services at RBC at the start of the forum. “We believe that now more than ever it’s a unique opportunity for businesses to reshape their strategies.”

The panel was moderated by Lynette Gillen, Vice President Trade at RBC Royal Bank, Bruce Archibald, Executive Director of Ontario Global 100, Graeme Deans, Strategy and Transactions Partner at EY-Parthenon, Dawn Desjardins, Vice President, Deputy Chief Economist at RBC Royal Bank, and the Honourable Andrew Leslie, CMM MSC MSM CD PC MP, previous commander and CEO of the Canadian army.

How Canadian Businesses Can Embrace Globalization

Q: 2020 has witnessed a major acceleration of several existing trends that has boosted the fortunes of some business sectors, but others have suffered. If these trends are signaling the future, what should Canadian businesses do to position themselves to benefit from them?

Graeme Deans identified two trends that were prevalent before 2020 but saw rapid acceleration this year: Clean energy and digitization. “Clean energy is one of the biggest focuses for investment today,” Deans said, and he feels the election of Joe Biden will further accelerate the trend. The rapid digitization of business, meanwhile, spanned across all industries and sizes of business as a result of the pandemic. “Small and medium sized enterprises in Canada have shown great resilience in embracing these technologies, and will continue to do so,” said Deans.

The Honourable Andrew Leslie, meanwhile, felt that Canada is already well-positioned with strong industries and great agricultural products that people around the world want more and more of. “But do we have the initiative, ability, energy and collective will to reach out and shift from our principal trade preoccupation with the U.S. and seize opportunities overseas?” he challenged, explaining that businesses have seen the hazard of placing the majority of eggs in one basket. “There are both opportunities and dangers on the horizon,” he went on. “I believe Canada is well-positioned, but we need to reach out. We can’t do what we did yesterday.”

Q: How will the trends of 2020 affect Canada’s economy going forward?

Dawn Desjardins discussed how small businesses have had to quickly pivot to create ecommerce platforms, and that the shift to remote work is likely here to stay. “15 percent of businesses say that people will predominantly work from a remote location post-pandemic,” said Desjardins. “45 percent of employees have said they prefer to work in an office two to three days per week. Businesses will have to be mindful of these attitudes as they look to the post-pandemic period.”

She went on to say that consumer spending is not necessarily shrinking, but rather is shifting. “Consumers in Canada spent more this July versus last July, but they spent it differently – for example on backyard and home leisure versus travel.”

Q: How are businesses responding to a global business landscape?

Bruce Archibald represents small- and medium-sized businesses through Ontario Global 100 and indicated that global reach has improved dramatically. “It’s much easier for businesses to reach out to clients, prospects and people from around the world without anybody having to travel. In the past, it was always felt that the warm introduction had to be made in person with a handshake.”

Archibald further explained that businesses have opportunities to reach into markets that they didn’t consider in the past. There are fewer borders and people are prepared to receive goods from many different parts of the globe.

Q: Seventy percent of our trade is with the U.S. If COVID continues to accelerate there and materially impacts their economy, how are Canadian businesses going to be affected?

Deans suspects governments on both sides of the border will do whatever they can to ensure that trade continues, indicating there is a strong desire not to have a massive shutdown of the economy. But, it’s important to build contingency plans for all kinds of scenarios, particularly around supply chain and movement of goods. “A number of Canadian companies are setting up facilities in the U.S., such as storage facilities or manufacturing, to ensure they can manage a border situation or deal with the politics of Brand U.S. while still maintaining a strong presence in Canada.”

Q: What will the impacts of COVID-19 on the U.S. economy mean for Canadian businesses?

Desjardins feels that the fall will report slower economic growth compared to the summer, and is predicting a rough first quarter to 2021 as jobs are not coming back as quickly as they are in Canada. “As we start to see the vaccine come through in the second half of the year, however, people and businesses will become more confident, and we will see a strengthening of the U.S. economy in the second half of next year.”

Q: Given what is happening in the U.S. now, where are the opportunities for Canadian businesses to look beyond North America in the short term?

Leslie cautioned to never underestimate the power of the American people and their economy. While they are going through a terrible time, it will pass. With Biden’s election, Leslie expects that investor confidence in the U.S. will grow stronger. “Biden is known for respect for rule of law, a measured approach, and team building. That will do wonders to increase confidence. There are multiple trillions of dollars looking for a home, and some will land in the U.S. Canada in turn will continue to reap benefits of our path to prosperity in the short-term being through the U.S., but we have seen the perils of over-concentration into economies where one or two people can make a big difference in how trade flow works.”

Leslie emphasized again the need for Canadian businesses to think internationally – to stop focusing only on North America.

Q: Not every business has the ability to pivot or rapidly change their business model. How can a medium-sized firm approach a merger opportunity that would allow them to successfully and quickly pivot?

Deans explained that it is difficult for an SME to look for acquisition candidates from scratch and that smaller businesses must rely on their networks and advisors to find opportunities. “Get ideas from peers, suppliers and rely on your Board of Directors or Advisory Board to bring you opportunities. Have them challenge you on what you want out of an acquisition and find attractive candidates that fly under the radar of larger private equity firms.”

Q: Tensions are high between the U.S. and China. What are the options for Canadian companies where the U.S. and China are using economic sanctions to achieve their political objectives?

Deans admitted that it’s a difficult and tense time right now. However, “Canada has no choice but to make its relationship with the U.S. work,” he said. But globalization will happen off a good product,” he said, citing Blackberry (in its prime) and Second Cup as ideas that exploded outside of North America. “Canada will have success in China by being sector-specific,” he further explained, acknowledging agriculture and oil as being strong overseas exports.

Q: The importance of online mastery and eCommerce is becoming an enabler to move outside of Canada – but we see SMEs are still struggling with their online presence. How can we help Canadian businesses get better at this?

Archibald explained that the biggest barrier to growth is the ability to attract and retain skills in a particular space. “When everyone in the world switches to doing things digitally, demand for people with those skills goes through the roof. Unfortunately, there is no short-term solution, but one thing the industry can do is work with institutions to make sure we are doing our best to fill the pipeline of skills as quickly as possible.

Q: How can we support entrepreneurs going forward?

According to Desjardins, the best way to support entrepreneurs is for other CEOs and business leaders who have been through challenging times before to share their experiences. “It’s not always been a part of our culture,” she admitted. “But one of the things that COVID has helped us come together on is the need to learn from each other and help each other. CEOs in successful companies are willing to share their knowledge.”

Deans added that business leaders and educators must help entrepreneurs, students and business owners embrace risk and learn how to manage it, versus avoiding it all costs. “It’s time to check your comfort zone at the door,” he said.

While opportunity lies beyond our borders, it also lives beyond our comfort zones. The key, as the Honourable Andrew Leslie has told us, is to reach for it.

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