1. Mobilize internal resources
Since February, the rules of the game have changed. The current geopolitical context and enthusiasm for buying local are generating great opportunities to revisit certain markets that may previously have been neglected.
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"Many Canadian businesses are taking steps to grow nationally. Activate your internal networks—employees, suppliers, clients—and tap into your banker’s network to identify potential business partners and introduce them to your solutions."
Vincent Landry, Senior Vice-President, Commercial Banking and Private Banking 1859, Quebec and Atlantic Canada.
What low-investment business opportunities are within your reach? Does your team have untapped ideas or expertise that could enhance your offering? These very questions have led Quebec-based companies in the lumber industry to diversify their operations. Pressured by U.S. tariffs, they have invested in optimizing and automating their production processes to create value-added secondary and tertiary transformation products. The result: reduced dependence on traditional markets and greater control over profit margins.
2. Consider mergers and acquisitions
A report from the Canadian Federation of Independent Businesses¹ estimates that 76% of SME owners are planning to exit their business by 2033. This represents over $2 trillion in business assets that could change hands. "M&A opportunities in Canada are everywhere and can be an attractive growth driver. They can help businesses gain new talent and complementary expertise or access a coveted market," adds Vincent Landry. "It’s also crucial to surround yourself with experienced partners who will support you with the financial, accounting, legal, tax and structural aspects of the transaction."
Is now the right time to expand your range of products and services? Which partner could complement your existing offering? Who could help you expand your presence in other provinces? These considerations led a Quebec-based IT company to acquire an Ontario firm. The deal allowed it to expand its team in a high-demand sector where talent is scarce and get closer to major clients.
3. Rely on your partners
In an inflationary and protectionist environment, companies worldwide are reassessing their costs and supply chains. How can you benefit from this trend, whether as a supplier or as a buyer?
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"Your financial institution can support your diversification and international expansion projects by connecting you with potential partners and support programs, such as those offered by Export Development Canada, Investissement Québec and the ORPEX network."
Vincent Landry, Senior Vice-President, Commercial Banking and Private Banking 1859, Quebec and Atlantic Canada.
For example, National Bank helped a Quebec-based company break into the European market by connecting it with partner banks, government business development agencies and professionals in the region. The company was able to position itself as a preferred subcontractor for local partners in the industry.
Asia, particularly Southeast Asia, is another fast-growing market, with economic prospects expected to surpass those of North America in the coming years, according to the International Monetary Fund. "Recently, the Canada-ASEAN Business Council held a conference at National Bank on Asian and Southeast Asian markets for Canadian companies," adds Vincent Landry. "There’s clearly growing interest among local players."
Combining growth and resilience
When it comes to exploring new market niches, activating internal and external networks or expanding their talent pool, diversification gives SMEs a foundation for sustainable growth and the flexibility to adapt, bounce back and stay competitive in any situation. In good times, diversification helps businesses seize promising opportunities more quickly. In uncertain times, it corrects overreliance on a single geographic market, client or sector.
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"Diversification is a powerful driver that reduces our dependence on a limited number of business allies, stimulates entrepreneurship and innovation and makes our country stronger and more prosperous."
Vincent Landry, Senior Vice-President, Commercial Banking and Private Banking 1859, Quebec and Atlantic Canada.