As 2024 gets off to a start, I want to begin by expressing the profound respect I have for you and for the role you play in our society. When you started a business, you started actively contributing to Canada's socio-economic development. People like you are helping our communities thrive.

And you're doing it in an economic environment that can cause a lot of uncertainty. Still, you have remained resilient. You've learned to adapt and stay the course. It's a quality I admire very much. And one that that's setting an example for future generations.

As expected, the Bank of Canada announced that it would hold its key interest rate at 5% at the end of January. The last rate increase was in July 2023, and our team of economists believes that rate hikes are over.

In fact, the drop in economic activity may prompt the Bank of Canada to start cutting rates in the near future. That should lead to a recovery in the second half of the year. Still, it will be limited by the pressure many households will feel when it's time to renew their mortgages at higher rates.

I want to provide some encouragement for you to take advantage of the economic slowdown and use this time to plan how you can grow and become more efficient this year. These periods are often good opportunities to reflect, to review your action plan, to adjust your strategy and to assess upcoming opportunities.

Your goal should be to avoid being too severely impacted by the slowdown so that you're ready to capitalize as soon as the economy recovers.

Think about how you can leverage a digital transformation to make your operations more efficient. Automating some of your processes can be a powerful way to be more competitive and resilient.

Canada lags considerably behind the US in digital investment, and the gap is even higher in Quebec. Between 2012 and 2022, IT investments in the US increased by 99%. In Canada, they only increased 13% over the same period.  

Embracing digital transformation isn't just a solution for labour issues. Businesses can unlock productivity gains which will boost competitiveness in the market and ensure long-term survival. Those gains often lead to growth by making it easier to launch new products or target client segments that may have previously been out of reach.

At Desjardins, we've worked hard to develop offers, products and partnerships that help us provide support that goes way beyond financial services. We use them to advise you about the digital shift and to keep the Canadian and Quebec economies globally competitive. 

I also want to raise an issue that we need to address now if we want to maintain our entrepreneurial capital and, by extension, keep head offices and business ownership local, here in Canada.

Over the next decade, we estimate that 76% of Canadian business owners will be looking for someone to take over their business. But only 1 in 10 of those owners have a formal succession plan in place.

Transferring a business can be a shock to the entire organization. It can create uncertainty for employees, partners and suppliers. But with proper planning over 5 to 7 years, business owners can minimize the repercussions to their business and ensure it thrives over the long term.  

The most common obstacle mentioned by business owners when they are succession planning is finding a suitable buyer.

At Desjardins, we support over a thousand businesses every year by helping SME owners develop a succession plan and find the best possible buyer, whether that's someone already in the business, or a new connection from new networks.

Our support-based services give clients access to business transfer loans, subordinated debt, and advice on key conditions (balance of sale price, transition period, management structure). We can also help you identify sector- or region-specific government programs, and so much more. Our advisors can help buyers and sellers create a balanced financing package and a corporate structure that will ensure the long-term success of the business. It's a critical period, and buyers and sellers need personal guidance on more than just the financial aspects.

We're passionate about helping business owners establish a succession plan and about supporting the next generation of entrepreneurs in a way that empowers everyone to reach their goals.

Another major challenge for businesses can be integrating environmental, social and governance (ESG) criteria into your activities. Major players, like big publicly-traded companies and governments, have to comply with regulatory frameworks and new standards that influence how they do business with their suppliers.

They're becoming more stringent about things like the carbon footprint of the companies they deal with. Not only that, but consumers are also increasingly basing buying decisions on companies' environmental and social practices.

It's more than a trend, and it's creating pressure on SMEs to be greener in order to stay competitive. 

But there are many opportunities hiding behind these challenges. More than 2,000 studies have confirmed that businesses that adopt ESG criteria aren't just viable—they often perform better than those that don't. 

And you know what? Many of you are already adopting practices that are aligned with these principles, whether you realize it or not.

This is not some impossible challenge. It's just a matter of identifying where you need to focus, coming up with potential solutions and structuring and integrating them into your business strategy.

Your success is our top priority. We firmly believe in the strength of our network and in our entrepreneurial community. We're confident that by working together, we can overcome the challenges that lie ahead.

At Desjardins, we like being there for you when things are good. But we're just as committed to helping you navigate any storms on the horizon and supporting your through crucial stages in your growth.

On behalf of the entire Desjardins team, I want to sincerely thank you for your renewed confidence. We're proud to be part of your success, and we look forward to working with you to build a thriving economic future.

Regards,