Most Canadian small biz use digital tools but few fully integrate

The vast majority of small businesses in Canada are using digital tools, but only a fraction have fully integrated them across operations, leaving significant productivity gains on the table, according to a recent report from the Canadian Federation of Independent Business.

The report, co-sponsored by Payworks and Sage, found that 92 per cent of small firms use digital tools, yet only 10 per cent have adopted them across all core functions. This gap comes as Canada’s productivity grew just three per cent over the past decade, compared to 18 per cent in the United States.

Businesses that invest in technology often see quick returns. More than half reported gains within two years, with an average 29 per cent boost in productivity in the first year. For every dollar invested, firms saw an average return of $1.60. Those classified as ‘digital leaders,’ who have fully integrated digital tools, reported $2.40 in returns for every dollar invested, 1.7 times higher than less mature adopters.

“Digital transformation isn’t just a buzzword — it’s becoming a key differentiator in small business success,” said Marvin Cruz, CFIB’s director of research and report co-author. He noted that digital tools can help automate tasks and free up time for strategy or personalized marketing.

While recent investments have focused on accounting, cybersecurity and IT, interest in artificial intelligence is growing. Nearly one-quarter of small businesses have adopted generative AI tools in the past three years, and 25 per cent plan to do so in the next three. Planned investments in AI analytics are set to more than double, from seven per cent to 16 per cent.

CFIB’s research suggests generative AI can significantly improve efficiency. Businesses using these tools gain an extra hour for every hour spent with them, saving an average of 1.08 hours per day. If even half of that time were reinvested into productive work, Canada’s GDP could rise by $12.8 billion. However, many firms remain at the starting line, held back by cost, time constraints and limited digital skills.

“While there’s growing interest in adopting AI and overall technology, small firms are still early in the journey,” said Alchad Alegbeh, research analyst at CFIB. “Helping SMEs go from early adoption to deeper integration is the next frontier and a big opportunity for Canada’s economy.”