Financing Profile: Small and Medium-Sized Enterprises in Tourism Industries

Business characteristics

Tourism small and medium-sized enterprises were typically younger and more growth-oriented

Table 1 presents a comparison of business characteristic between SMEs in tourism industries with SMEs in non-tourism industries. In 2007, SMEs in tourism industries were typically younger than their non-tourism counterpart. As shown in the Table 1, 11 percent of SMEs in tourism industries had been selling goods and services for one to two years compared with 8 percent of SMEs in non-tourism industries. In contrast, 68 percent of SMEs in tourism industries had been selling goods and services for over six years compared with 73 percent of SMEs in non-tourism industries.

Table 1
Business Characteristics, 2007*

Business Characteristics	Tourism SMEs (%)	Non-Tourism SMEs (%)
* Bold values denote statistically significant difference at 5 percent. Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007.
Year Firm Started Selling Goods
Between 2002 and 2004 (1–2 years old)	11	8
Between 1999 and 2001 (3–5 years old)	21	19
Prior to 1999 (6 or more years old)	68	73
Stage of Development (as identified by the owner)
Start-up	5	4
Fast Growth	16	9
Slow Growth	48	38
Maturity	27	37
Decline	5	11
Growth Intentions
Intend to expand business within next 2 years	45	40
Current financing sufficient to fund expansion plans	46	59

Although being relatively young, few SMEs in tourism industries reported being in the start-up stage of business. The majority of businesses in tourism industries identified themselves as being in the slow growth stage of business (48 percent). Interestingly, tourism business owners were more likely than non-tourism business owners to identify their business sales as experiencing either fast growth or slow growth but were less likely to identify their business sales as declining or experiencing no growth ("maturity").

Not only were SMEs in tourism industries more likely to be in the fast growth stage of business but they were also found to be more growth-oriented than their non-tourism counterpart. As shown in Table 1, in 2007 45 percent of SMEs in tourism industries had intentions to expand the size or scope of their business in the next three years, while only 40 percent of SMEs in non-tourism industries reported the same intentions. Despite being more growth oriented, SMEs in tourism industries were less likely than those in non-tourism industries to have sufficient financing to fund their expansion plans.