Among Canadian small businesses, while 92 percent have utilized digital tools, only 10 percent have fully integrated them across operations, suggesting significant productivity and growth gaps, according to a recent report by the Canadian Federation of Independent Business (CFIB).
In a media release, CFIB said its report, co-sponsored by Payworks and Sage, highlighted the potential of digital adoption to occupy an integral position in the Canadian economy.
The report found that Canada’s productivity rose just three percent over the last decade, compared with 18 percent in the US.
According to CFIB, among businesses polled, 55 percent saw returns on their technological investments within the first two years, with an average 29 percent increase in productivity in the first year.
CFIB said businesses received an average of $1.60 in return for every $1 invested, while digital leaders that had fully integrated digital tools across all core functions received $2.40 in return for every $1 invested, 1.7 times higher than their less integrated counterparts.
“Digital transformation isn’t just a buzzword—it’s becoming a key differentiator in small business success,” said Marvin Cruz, CFIB’s director of research and report co-author, in the media release.
“While not a panacea, digital tools can help inspire content, speed up projects, and automate repetitive tasks, freeing up time to take on more clients or focus on other important work such as strategy or personalized marketing,” Cruz added.
CFIB’s research revealed that small and medium-sized enterprises (SMEs) using generative AI (Gen AI) could double their time, earn an extra hour for every hour they used it, and dedicate that excess time to other business tasks.
CFIB shared that Canadian SMEs saved an average of 1.08 hours per day using GenAI, and reinvesting even half that extra time into productive tasks could raise the country’s GDP by $12.8 billion.
However, CFIB noted that many small businesses failed to fully take advantage of AI’s potential due to costs, insufficient time, or limited digital skills.
“While there’s growing interest in adopting AI and overall technology, small firms are still early in the journey,” said Alchad Alegbeh, a CFIB research analyst, in the media release. “Helping SMEs go from early adoption to deeper integration is the next frontier and a big opportunity for Canada’s economy.”
AI investments
The study showed that business investment has primarily centred on accounting, cybersecurity, and IT over the past three years.
However, the research found a rising confidence in AI’s potential to improve productivity. Among SMEs surveyed:
- 23 percent have invested in Gen AI tools these past three years
- 25 percent intended to do the same in the next three years
- 16 percent, up from seven percent, planned to invest in AI analytics
Recommendations
As the federal government embarked upon public consultations on its AI strategy, CFIB encouraged policymakers to consider the following recommendations to hasten Canada’s progress and enhance its productivity:
- Spread awareness regarding available government programs and incentives for digital and AI adoption
- Add tax-based incentives like investment tax credits, accelerated capital cost allowances, or a return to immediate expensing, which would allow small businesses to write off a maximum of $1 million in capital expenses associated with digital investments
- Lower corporate and payroll taxes and offer other tax relief to enable SMEs to invest in technology and training
- Provide accessible guidance – such as simple resources, success stories, and sector-specific examples – to improve understanding of how AI and other digital technologies can back business goals