The Big Economic Impact of Small Business

The impact of small business on the Canadian economy

We all interact with small businesses everyday, from the corner convenience store where we pick up a jug of milk for breakfast and the coffee shop we frequent on our way to work, to the small restaurants we eat our lunch and local bars where we wind down at the end of the day. But we don’t often think about what a big impact all these small enterprises make on the national economy. But the fact is, almost all Canadian companies (98 per cent) are considered “small business” as defined by Industry Canada (i.e. they have less than 100 employees), and they cumulatively contribute more than 30 per cent to our GDP. Here we look at some of the ups and downs of being a small business owner, and some tips on how to be a better one.

Big Praise for Small Biz

“Small businesses and entrepreneurs generate the big ideas that drive innovation and growth,” says Colleen McMorrow, Ernst & Young’s Canadian Leader of Entrepreneurial Services. “They take risks that help create jobs and generate wealth. They push the economy forward. And they invest in communities across the country.” The Canadian Chamber of Commerce adds that “vibrant small businesses are crucial to Canada’s economic prosperity.”

Be In Control

Who among us hasn’t fantasized about being their own boss? And, when you own your own business, that’s exactly what you are. There’s no denying that it takes a lot of work – and perhaps more hours than you might like – but, at the end of each day, you’re the one in charge and the one to reap the potential benefits if your company takes off.

A Matter of Survival

Being an entrepreneur can be risky business. While 85 per cent of new businesses survive their first year, barely half (51 per cent) make it to their fifth birthday according to Industry Canada.

Part of the problem might be red tape. The Canadian Federation of Independent Business recently released a study on bureaucratic red tape that they say costs Canadian businesses $31 billion a year. And hardest hit are small businesses (those with less than five employees). According to a CFIB report, various government regulations costs small companies $5,942 per employee, every year. A survey of CFIB members found that one-third “might not have gone into business” if they knew how difficult a burden it would be and more than two-thirds said red tape significantly reduces productivity.

Get Your Resources Ready

Knowledge is power, and the more you know before going into business for yourself the more likely you are to succeed. There are a number of online resources (many of which link to bricks-and-mortar organizations) that can help small businesses succeed. Here are some of our favourites.

The Business Development Bank of Canada 
This federal financial institution has more than 100 offices across the country set up specifically to help small business owners with their financial needs. Online, they’ve posted a wealth of information on starting, operating, and selling a business.

Profit Magazine is the online version of “Canada’s Guide to Business Success,” a bi-monthly magazine crammed with advice on everything from how to turn your great idea into a viable, thriving business, to how to sell or pass it on to the next generation when you’re ready to retire.

The Canadian Federation of Independent Business 
This association, representing more than 100,000 small businesses from across the country, lobbies on behalf of and provides support for its members, including members’ discounts at affiliated companies.

Related Topics

Economic News / Personal Finance

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