BDC survey indicates growing digital divide among Canadian businesses

ecommerce

Praise Okwumabua didn't think a hair salon really needed an online store.

"Who's going to buy shampoo online," the owner of Winnipeg's Freshair Boutique said of selling hair and beauty products online. "They'll buy it when they come in here."

But when the pandemic hit, her website gained the attention of shoppers keen to support local businesses and by November 2020 the salon recorded $7,000 in digital sales.

Okwumabua's success online was highlighted in a new Business Development Bank of Canada study on technology and businesses released Tuesday that suggests businesses that invest in technology are more likely to perform better, grow faster and secure financing.

The research, based on the responses of 1,500 small- and medium-sized businesses polled in late 2021, indicated there is a growing digital divide among businesses in Canada as businesses without an effective digital presence are less likely to attract investment and be profitable.

Okwumabua's salon has now added a 24-hour online booking system and uses Instagram to post hair styles and market its business.

Her business has attracted a new wave of clients that are more digital savvy and seem to care less about the personal touches her older clients appreciate, she told the BDC.

"They want to confirm via text, they like to pay online," Okwumabua said. "They also don't need you to hang up their jacket or make an appointment for them."

The BDC study said only one in 20 businesses surveyed are using digital technologies effectively, despite more than 90 per cent investing an average of $118,000 in technology last year.

The BDC research found about 40 per cent of businesses polled didn't have a website, with cost and cybersecurity identified as the biggest barriers to going digital.

Pierre Cleroux, vice-president of research and chief economist of the federal entrepreneurs' bank, said businesses that aren't online are less likely to be profitable and attract investment.

"If you're not online, you're basically invisible to this new generation," he said in an interview. "A third of businesses that aren't using digital technology actually didn't make a profit."

Businesses in the construction and personal services sectors tended to invest the least in technology, the BDC research found.

Yet Cleroux said the digital success of a business has more to do with the owner than the industry.

"It's really driven by the entrepreneur," he said. "Younger entrepreneurs are all online because that's part of their generation."

Forum Research conducted the online survey of 1,559 Canadian businesses last November and December.

The polling industry's professional body, the Canadian Research Insights Council, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.