Alchad Alegbeh
Research Analyst, CFIB
Francesca Basta
Bilingual Research Assistant, CFIB
Automation can give small businesses a competitive advantage in the marketplace, but many need support in overcoming the barriers to adoption.
The convergence of labour shortages and rapid technological advancements has fuelled a growing demand for automation among small businesses. This solution is becoming increasingly vital to sustain and enhance productivity. Despite potential benefits, recent findings from a Canadian Federation of Independent Business (CFIB) survey indicate that 43 per cent of Canadian small businesses have not embraced automation.
How can small businesses benefit from this technology? How close are we to achieving an effective integration of automation to address the challenges faced by small businesses? What are the key factors impeding the adoption of automation? Let’s explore.
Automation adoption
Compared to 2022, over half of all small businesses (52 per cent) are currently using job/process automation, with 19 per cent intending to increase implementation in 2023. The adoption of automation across all sectors of the economy provides a competitive advantage for the small businesses that take the leap. The sectors most inclined to embrace automation include finance, insurance, and real estate (32 per cent), closely followed by manufacturing (32 per cent), agriculture (29 per cent), and business administration and management (29 per cent). Overall, these sectors are turning to automation as a direct response to the labour shortages prevalent in the economy.
Automation is an effective solution for small business owners that can help address staffing challenges, yet its full potential remains untapped and underutilized. A CFIB report highlights that 33 per cent of businesses across all sectors have invested in automation to cope with labour shortages, with a remarkable 81 per cent success rate. This rate showcases how automation improves productivity and competitiveness. It does so by enhancing efficiency while reducing human error, resulting in time and cost savings for businesses. Despite these potential gains, 43 per cent of Canadian small businesses aren’t fully leveraging the benefits of automation.
Key drivers of automation engagement
Small businesses are adopting automation to drive productivity improvements and enhance working conditions while also addressing the challenges posed by labour shortages. Areas where automation is most likely to be implemented are accounting and payroll processes. Not surprisingly, there are substantial variations amongst sectors and size of businesses, with micro businesses having the least flexibility implementing automation.
What’s holding small businesses back? While automation solutions can streamline operations and enhance efficiency, small businesses often face financial constraints that limit their ability to invest in new technologies. They often prioritize essential expenditures, leaving automation as a secondary consideration. Additionally, the lack of access to automation tools, their compatibility with existing systems, and the perceived daunting and time-consuming complexity of implementation further deter the adoption of automation solutions.
Boosting engagement in automation
Industry leaders, policymakers, and entrepreneurs must collaborate to address existing barriers to foster an environment where automation can become a viable solution. Despite the increasing number of government initiatives aimed at assisting small businesses in adopting automation, many remain unaware of these programs or fail to meet qualification criteria. By employing multiple communication channels and streamlining application processes, a greater number of small businesses could gain access to these programs. Moreover, allowing small businesses increased access to capital by reducing their current tax burden or exploring alternative avenues would incentivize them to embrace innovative practices.
Education and awareness are essential in helping small businesses embrace automation. The CFIB’s Savings Programs allow members access to great rates on automated products and services, such as payment and payroll services. Visit cfib.ca/savings to learn more.
