Between U.S. tariffs, Canadian countermeasures, exemptions, and surprise declarations, trade tensions highlight the risks of overreliance on a single partner. “Quebec SMEs have every interest in diversifying their activities and revenue sources, as well as revisiting their growth strategies to be more resilient,” says Vincent Landry, Senior Vice-President, Business and Private Wealth at 1859, Quebec and Atlantic. Here are three levers to achieve this.
1. Mobilize your internal resources
Since February, the rules of the game have changed. The current geopolitical context and the craze for local purchasing create excellent opportunities to revisit certain markets that were perhaps previously neglected.
Many Canadian companies are taking steps to grow domestically. Activate your internal networks—staff, suppliers, customers—and leverage your banker’s network to identify potential business partners and present your solutions to them.” Vincent Landry, Senior Vice President, Business and Private Wealth Management, 1859, Quebec and Atlantic
What low-investment business opportunities are available to you? Does your team have untapped ideas or expertise that could enrich your offering? These same considerations have led Quebec companies in the lumber sector to diversify. Under pressure from U.S. tariffs, they invested in optimizing and automating their production processes to create value-added secondary and tertiary processing products. As a result, they reduced their dependence on traditional markets while gaining control over their profit margins.
2. Consider mergers and acquisitions
A report from the Canadian Federation of Independent Business¹ estimates that 76% of SME owners plan to sell their businesses by 2033, representing more than $2 trillion in business assets to be transferred. “Mergers and acquisitions opportunities in Canada are omnipresent and offer an interesting growth lever to take advantage of new talent, complementary expertise, or access to a coveted market,” continues Vincent Landry. “It is also important to surround yourself with experienced partners who will support you with the financial, accounting, legal, tax, and structural aspects of the transaction.
Is this the right time to expand your product and service offerings? Which partner could complement your current offering? Who could help you expand your presence in other provinces? This is what encouraged a Quebec information technology company to acquire an Ontario firm. This commercial agreement allowed it to grow its team in a cutting-edge sector where talent is scarce and to establish closer ties with major clients.
3. Rely on your partners
In an inflationary and protectionist environment, companies around the world are reviewing their costs and supply chains. How can you take advantage of this trend, whether as a supplier or a buyer?
Your financial institution can support your international diversification and expansion projects by guiding you toward potential partners and support programs, such as those of Export Development Canada, Investissement Québec and the ORPEX Network.” Vincent Landry, Senior Vice President, Business and Private Management, 1859, Quebec and Atlantic
For example, the National Bank supported a Quebec company in breaking into the European market by connecting it with partner banks, public business development agencies, and professional expertise in the region. The company thus positioned itself as a preferred subcontractor for local industrial partners.
Asia and Southeast Asia also represent fast-growing markets, whose economic outlook is expected to surpass that of North America in the coming years, according to the International Monetary Fund. “Recently, the Canada-ASEAN Business Council held a conference at the National Bank on Asian and Southeast Asian markets for Canadian companies,” adds Vincent Landry. “We see growing interest in local players.”
Combining growth and resilience
Whether it’s exploring new niches, activating internal and external networks, or enhancing their talent pool, diversification provides SMEs with the foundation for sustainable growth and essential leeway to adapt, rebound, and remain competitive, whatever the circumstances. In favorable times, this approach allows them to seize promising opportunities more quickly. In times of uncertainty, they correct their imbalance toward a single geographic market, customer, or sector.
