Why most Small Business Owners Chose Growth Over Profit

Growth beat profitability this year, and the margin tells you why. In a survey of 2,500 small and medium sized business owners across Canada, 78% said they're focused on growing their business, up from 67% a year earlier. Expansion is now the single top priority for 46% of them, up from 34% in 2025, according to the Business Development Bank of Canada, which commissioned the study ahead of Small Business Week. Read as a headline, that's a story about optimism holding up under pressure. Read against the rest of the survey, it's a story about squeezed margins.

The same research found 29% of owners calling US tariffs a major challenge and 31% naming competition as their main one. Nearly half said the business environment is changing faster than it was two years ago, and 59% agreed that slow movers risk falling behind. Growth isn't the prize in that environment. It's the mechanism owners are hoping will keep them solvent, and those are very different things.

Why Growth Became the Cheaper of Two Options

Profitability runs through margin, and margin only moves in two directions. You raise prices, or you cut costs. Tariffs attacked the cost line from the outside, and the 31% who named competition explain what happens when owners reach for the price line instead. Cost cutting has a floor too, and most small firms have already trimmed everything that can go without touching the thing customers actually pay for. That leaves volume.

Work through a plain example. A company doing $1 million in revenue with inputs at 40% of sales buys $400,000 of goods and materials a year. If landed input costs climb 10% because of tariffs, that's $40,000 gone. At a 5% net margin, annual profit was $50,000, so the tariff bill eats 80% of it. Recovering that $40,000 through sales alone would take $800,000 of additional revenue at the same margin, an 80% jump. Nobody grows 80% to stand still.

Shaving 8% off landed input costs, by contrast, hands back $32,000, which is most of the hole. That arithmetic explains why the survey's tactical answers don't resemble a growth strategy at all. Owners are changing suppliers, hunting customers in new Canadian markets and outside the US, and putting money into technology and training. The growth headline is loud. The moves underneath it are quiet, unglamorous and mostly about cost.

The Supply Chain Move Comes Before the Sales Push

Re-quoting your inputs is the least romantic item on that list and the fastest to pay back. A separate 2026 survey of Canadian small businesses with US-related activity found more than half had scaled that activity back since the trade war began, with roughly one in ten cutting ties completely. Patriotism rarely drove those decisions. Arithmetic did, because for an owner staring down a 10% input increase, a supplier with no border crossing in the middle is a margin decision.

Quote the same component from two sources in different currencies, split one large US vendor into two regional ones, and check whether your exposure sits in what you buy or in what your customers buy from you. Tooling, qualification and freight make switching expensive at the front end, so the money has to come from a named revenue line instead of general optimism. Do one product family at a time and track landed cost per unit before and after.

Selling Where You Can Already See Demand

Expansion in the survey's version is modest: new regions inside Canada, new customers outside the US. That's the right instinct, because demand you can already observe converts far better than demand you have to imagine. If you can name three buyers who have asked for something you don't currently sell them, and serve them without new warehouses or certifications, you have an expansion plan financed by customers. If the first invoice requires new premises, a new licence and a new language, you have a fundraising plan.

Pitch competitions and founder conferences belong in that second category unless you treat them as a channel. Applications open months before most events, and the 2026 calendars published by university entrepreneurship programmes and industry associations are dense enough that scouting takes two evenings and a spreadsheet. Bring evidence of repeat purchase and one specific sentence about what the money accelerates. Judges working against a clock are running diligence, and diligence rewards momentum over ambition.

Growth Consumes Cash Before It Produces It

Expansion is a working capital event long before it's a revenue event. New customers pay on terms, so receivables grow first, and stock has to be bought before it sells, which means the cash leaves in month one and returns somewhere around month four. A business growing 30% on a 5% net margin is funding that entire gap out of a reserve holding a few weeks of payroll, and that gap, not weak demand, is what turns an ambitious year into a liquidity problem.

Tie every growth move to a collection date rather than a revenue forecast. Supplier switching carries almost no working capital cost and pays back immediately, which is why it goes first. Market entry should be capped at a share of monthly free cash the business can afford to lose twice without breaking. If a new market needs the whole reserve on the first attempt, it's too fragile for a year like this one.

Speed Is Not the Same Thing as Sequence

Canada's Small Business Week runs October 19 to 25, and BDC has built this year's programme around a two-speed world where businesses either adapt quickly or fall behind. The framing works as a prompt and fails as a personality test, because speed on its own just moves cash out the door faster. Most owners who get into trouble in a volatile year aren't the slow ones. They're the ones funding three changes at once from the same thin reserve, then discovering which one they can't pause. The order matters. Supplier switching improves next month's margin, adjacent demand reuses infrastructure you've already paid for, and technology comes third, once you know which constraint the new volume is going to break.

The Productivity Spend That Actually Pays Back

Both the survey and the week's agenda push owners toward technology and training, which are the easiest line items to buy and the hardest to prove. Productivity isn't a purchase. It's a change in how work moves through a week, and the gain usually sits in the workflow rather than the tool.

A practical filter for tech spending is to attach every tool to a cost that recurs weekly, such as quoting, scheduling, invoicing or stock counts. Tooling that shortens your highest-frequency task tends to pay back in weeks. Tooling that improves the customer experience without a number attached is a marketing expense wearing a productivity label. If you can't say which hours or dollars the software removes, you don't have a case.

What the 78% Number Leaves Out

Surveys of intent measure mood, and 78% is a mood. The same research shows a majority willing to say they'll adapt, while far fewer can produce a document with a number, a deadline and a funding source on it. That document is the only version of a growth plan that survives a slow quarter. Ambition that lives inside a survey answer carries no overhead and no risk, which is exactly why it's easy to claim.

The owners answering these questions are the ones still trading in October 2026, after a year BDC's own public commentary has described as a challenging one for Canadian entrepreneurs. Their confidence is real, and it has been filtered through a year of attrition that removed the businesses with the least room to manoeuvre. The 78% describes the survivors, not the whole field.

The cost-side-first model beats the new-market-first model in this environment, and the gap isn't close. Supplier renegotiation shows up in gross margin within one or two purchase cycles. A new export market takes quarters, sometimes years, and burns cash while it matures. An owner who inverts that order is borrowing tomorrow's margin to chase the customer they hope will replace it.

Which leaves the 78% reading less like a confidence index and more like a signal that profitability has been squeezed hard enough that volume became the only lever left. The figure to watch over the next two quarters isn't the share of owners who say they're growing. It's the share who can show a lower landed cost per unit than they had a year ago, because those two numbers will diverge. Growth is the priority right now because the margin isn't there, and repairing the margin is the only version of this plan that doesn't end in a liquidity crunch.