1. Business & Agriculture Small and Mid-Size Business in Alberta A Changing Landscape Edward Straw, Vice President – Business Solutions, ATB Business & Agriculture April 10, 2014

3. Business & Agriculture Who is ATB Financial?

4. Business & Agriculture Staying connected with Albertas businesses 75 th Anniversary 5,300 A ssociates 242 Alberta communities

5. Business & Agriculture Who is ATB Business & Agriculture?

6. Business & Agriculture Here through the ups and downs Source: Bank of Canada Report C3, August 2012.

7. Business & Agriculture Alberta Business Landscape

8. Business & Agriculture Make-up of Alberta Businesses 98.1% employ less than 50 people (Small) Source: Statistics Canada, Business Register (based on business locations), December 2011. 81.6% employ less than 5 people (Micro) 1.8% employ 50 to less than 500 employees (Mid-sized) Small & Medium Sized Enterprises (SMEs)

9. Business & Agriculture Business Firmographics Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, with 300 respondents. Business Location(s) 48% of SMEs only conduct business in Alberta Business Scope Change from last quarter

10. Business & Agriculture Albertans rank high in Foreign Activities Source: ATB Daily Economic Comment, Todd Hirsch – March 11, 2014

11. Business & Agriculture A very optimistic future Alberta Economy 84% will be better off or the same Your Company 92% will be better off or the same HOW DO YOU THINK… WILL BE SIX MONTHS FROM NOW? Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents. (±) Change from last quarter -3 +3

12. Business & Agriculture Leading the Country in Retail Spending Growth Source: ATB Daily Economic Comment, Todd Hirsch – Feb 24, 2014 % increase in population

13. Business & Agriculture Introducing the ATB Business Beat Indexes Data time periods: Q1 = Jan 2013, Q2 = May 2013, Q3 = Aug/Sept 2013 & Q4 = Dec 2013. Source: ATB Financial, Survey on Alberta SMEs 2013. More optimistic about future performance Less optimistic about future performance Index (0-100) ATB Business Beat Indexes

14. Business & Agriculture FACT Majority of Alberta SMEs are growing

15. Business & Agriculture Intentional growth is paying off 72% of SMEs are intentionally trying to grow their business. 53% are seeing growth in their business as a result of their efforts. 14% are experiencing organic growth. OVER THE NEXT 24 MONTHS, DO YOU HAVE ANY PLANS TO…? % YES Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents.

16. Business & Agriculture 3 Tips for Intentionally Growing Your Business 24 % of SME owner/operators report advertising or marketing is important Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents. 19 % Develop customer relationships 19 % Hire and retain quality employees GOOGLE ADVERTISING, ADVERTISING ONLINE. IN OUR BUSINESS, BEING IN FLOWERS PEOPLE WHO WANT TO SEND FLOWERS DO NOT GO TO YELLOW PAGES, THEY GO ONTO GOOGLE AND TYPE IN FLORISTS IN CALGARY. General Manager, Retail Flower Shop, 17 years in business, $500k -< $1MM in revenue.

17. Business & Agriculture FACT Running a Business is harder today than it was 5 years ago

18. Business & Agriculture Running an SME hasnt gotten any easier! DO YOU FEEL IT IS EASIER OR MORE DIFFICULT TO RUN A SMALL BUSINESS TODAY THAN IT WAS FIVE YEARS AGO? TODAY 5 YEARS AGO Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents. 70% say it is more difficult to run a business TODAY 16% say its about the same 10% say it was harder 5 YEARS AGO

19. Business & Agriculture JUST TO TRY TO GET PEOPLE, FOR STAFF. NOBODY WANTS TO BE A TRUCK DRIVER THESE DAYS. THE WOES OF RURAL ALBERTA, WE JUST DON'T HAVE THE PEOPLE. EVERYBODY WANTS TO BE IN THE CITY. WE HAVE TO COMPETE WITH ALL THOSE LARGE PLANTS UP AT THE TAR SANDS. Small businesses who report its harder point to: Owner, Construction business, 50 years in operation, 5 to 19 employees, $3M-$5M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report its MORE DIFFICULT to run a business today (n= 211 ); responses mentioned by 3% or more are shown. WHY DO YOU THINK ITS MORE DIFFICULT TO RUN A BUSINESS TODAY?

20. Business & Agriculture Small businesses who believe its easier mention: THE EASE OF COMMUNICATING AND TECHNOLOGY HAS MADE IT EASIER TO RUN. WE CAN COMMUNICATE BETTER WITH OUR CUSTOMERS VIA THE WEB AND OTHER SOURCES AND THE OPERATIONS OF THE COMPANY ARE MORE STREAMLINED BECAUSE THEY ARE MORE COMPUTERIZED. General Manager, Energy or Oil and Gas, 38 years in business, 5 to 19 employees, $3M-$5M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report its EASIER to run a business today (n= 30 ); responses mentioned by 7% or more are shown. WHY DO YOU THINK ITS EASIER TO RUN A BUSINESS TODAY?

21. Business & Agriculture What are the HR & Labour challenges? Source: ATB Financial, Survey on Alberta SMEs, January 2013, with 147 respondents reporting the area of HR/Labour is the most difficult.

22. Business & Agriculture FACT Many SMEs are going to change hands in the next 5 years

23. Business & Agriculture 34% of SME owners plan on exiting their business in the next 5 years Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents.

24. Business & Agriculture Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents. No time to deal with the issue Have not thought about it Dont know where to start It is too far in the future Have not decided what to do with business 52% of SMEs expecting to be sold, transferred, or wound down (in the next 5 years) DO NOT have a succession plan!

25. Business & Agriculture Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents. 48% of SMEs expecting to be sold, transferred, or wound down in the next 5 years (with a succession plan) expect to sell to a third party

26. Business & Agriculture Boomer Businesses are Booming! 29 % of SME owner/operators report being 55+ years of age. 55 % of Alberta SMEs owners/operators (aged 55+) do not have a succession plan. Source: ATB Financial, Survey on Alberta SMEs, May 2013, 303 respondents. 35 % of Alberta SMEs owners/operators (aged 55+), who do not have a succession plan, report having no plans to let go of the business.

27. Business & Agriculture FACT Technology has made a positive impact on business operations

28. Business & Agriculture Technology has improved business operations WOULD YOU SAY TECHNOLOGY HAS HAD A POSITIVE OR NEGATIVE IMPACT ON YOUR BUSINESS OPERATIONS OVER THE LAST FIVE YEARS? Source: ATB Financial, Survey on Alberta SMEs, Dec 2013, 300 respondents. Multiple Mentions IT'S MORE EFFICIENT, THERE'S LESS ERRORS DUE TO PENMANSHIP. BETTER CLARIFICATION OF IDEAS. IMPROVEMENTS TO PATIENT CARE, WE NO LONGER HAVE THAT LACK OF COMMUNICATION, LACK OF UNDERSTANDING DUE TO CLERICAL ERRORS. Clinic Manager, Health Care, 25 years in business, 1 to 4 employees, Undisclosed revenues. POSITIVE IMPACT

29. Business & Agriculture Technologys POSITIVE impact EASIER TO COMMUNICATE WITH CUSTOMERS, THROUGH EMAIL, THROUGH SOCIAL MEDIA, THROUGH WEBSITE CONNECTIONS. Owner, Wholesale business, 32 years in business, 5 to 19 employees, $1M-$3M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report technology has had a POSITVE impact on their business (n= 259); responses mentioned by 3% or more are shown. WHY DO YOU THINK TECHNOLOGY HAS HAD A POSITIVE IMPACT ON YOUR BUSINESS?

30. Business & Agriculture Technologys NEGATIVE impact BECAUSE OF THE ONLINE RETAILERS. THEY CHECK THE PRICING ON ONLINE RETAILERS, THEY COME INTO YOUR STORE TO ACTUALLY LOOK AT IT. FEEL IT, TOUCH IT, HOLD IT. BUT THEN THEY GO BACK TO THE ONLINE RETAILER THAT DOESN'T HAVE THE RENT AND STAFFING CHARGES AND THEY BUY IT FROM THEM. THAT'S A NEW THING THAT'S CAME ON IN THE LAST 5 YEARS THAT WE'RE HAVING TO GRAPPLE WITHQUOTE. Owner, Retail business, 19 years in business, 5 to 19 employees, $1M-$3M in revenues. Source: ATB Financial, Survey on Alberta SMEs, Dec 2013; among those who report technology has had a NEGATIVE impact on their business (n=37 ); responses mentioned by 5% or more are shown. WHY DO YOU THINK TECHNOLOGY HAS HAD A NEGATIVE IMPACT ON YOUR BUSINESS?

31. Business & Agriculture Best Advice for Start-up Success

32. Business & Agriculture Best advice for start-up success from established businesses Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, responses mentioned by 3% or more are shown. MANAGE CASH FLOW, BECAUSE IT'S YOUR LIFELINE. IF YOU HAVE NO CASH THEN YOUR BUSINESS IS DONE PRETTY QUICKLY. CFO, Energy/Oil & Gas Company, 10 years in business, $20MM+ in revenues.

33. Business & Agriculture Reasons for Becoming an Entrepreneur

34. Business & Agriculture What I love about owning/ running/ being responsible for an independent business is… 47 % of SME owner/operators report … The ability to make my own decisions Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 98 respondents. 13 % Control over own business 12 % Flexibility of hours I LIKE TO BE ABLE TO CONTROL WHAT HAPPENS IN THE BUSINESS AND WITH OWNING A BUSINESS YOU HAVE SOME CHOICES AND FREEDOMS AND ARE IN CONTROL OF YOUR OWN DESTINY. Pharmacy Owner 35 years in business, $1MM - $3MM in revenue.

35. Business & Agriculture Barriers for Growth of Small-Sized Business

36. Business & Agriculture Uncovering the greatest barriers to grow for small-sized businesses Source: ATB Financial, Survey on Alberta SMEs, Aug/Sept 2013, 300 respondents, total responses mentioned by 4% or more are shown.. 47% 20% 11% 10% 9% 6% 8% 17% 13% 6% 4%

37. Business & Agriculture Conclusions

38. Business & Agriculture A large wave of business succession is coming. Majority of small businesses say its harder to run a business today than five years ago. Investments in technology are yielding positive changes for business operations. 1 2 3 Key Insights

39. Business & Agriculture Questions? Edward Straw VP, Strategic Business Solutions (403) 974-8088 or estraw@atb.comestraw@atb.com