Top reasons Canadian small businesses should expand internationally

Small and medium-sized businesses play an important role in employing Canadians and make a significant contribution to the nation’s economy. 

Of the roughly 1.23 million employer businesses in Canada, 1.2 million (nearly 98%) are small businesses, more than 22,900 (about 1.9%) are medium-sized businesses and around 2,980 (0.2%) are large businesses.

Small businesses employ nearly 10 million Canadians, making up about two-thirds of the total labour force.

With a population of just more than 38 million, Canada has a relatively small consumer base and only about 12% of Canadian small businesses export their goods or services internationally. However, studies have shown that businesses that export have higher sales, are more resilient during economic downturns and have more growth potential. 

Here are five reasons why Canadian small businesses should expand internationally.

Canada is the most connected G7 country in the world

While doing business internationally can be hampered by factors like duties, taxes, customs fees and border restrictions, Canadian businesses can take advantage of the country’s free trade agreements.

Canada has 14 free trade agreements covering more than 50 countries and 60% of the world’s GDP, giving Canadian businesses access to 1.5 billion consumers around the world.

These free trade agreements allow local small businesses to use Canada’s trade network to their advantage, including supply chain integration, preferential access to world markets, lower risk for service providers and investors, and facilitated business travel to partner countries.

Canada’s brand advantage

Canada has one of the best reputations in the world, which is a clear competitive advantage for Canadian exporters.

In 2021, Canada was ranked the #1 best country in the world in the Best Countries Report from US News & World Report.

To many countries around the world, Canada is a reputable and appealing country to do business with. Many foreign buyers see products made in Canada or from Canada as a good, quality investment and Canadian small businesses can use this positioning to their advantage. 

Canada’s brand advantage helps set Canadian businesses apart on the world stage and market their products as high-quality, trustworthy and innovative.

Increased ability to compete domestically

Businesses that expand internationally have the opportunity to grow their potential and gain a better understanding of how to evolve their operations and preserve when challenges arise. Canadian retailers and businesses that export are generally more diversified, becoming less dependent on a single market, which reduces their risk when there are downturns in the local economy.

Competing in the global marketplace is different than doing business at home and businesses that expand internationally can apply what they’ve learned to the domestic market, potentially leading to new and improved ways to compete and thrive in their market at home.

Digital technology makes exporting easier

The advent of e-commerce and online marketing make reaching overseas markets easier than ever. Today’s technology means Canadian businesses can expand their customer base internationally at a low cost without incurring any major start-up costs.

Thanks to e-commerce platforms and digital marketing technology and social media, it’s now become easier than ever for Canadian small businesses to reach global markets and compete against larger organizations on equal footing.

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