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Policy Matters: Small Business Week
Policy Matters: Small Business Week
Did you know 98% of businesses in Canada are small businesses?
Did you know 98% of businesses in Canada are small businesses?
Small businesses are organizations that employ less than 100 people. While they’re small in size, their economic significance and contribution to Canada’s gross domestic product (GDP) and workforce are big.
Small and medium sized businesses contribute over half of Canada’s GDP and represent 63% of all employees (10.7 million people). Of all the private sector jobs available in Canada, 88% of them are in an SME.
This year, October 15-21 is Small Business Week. Started almost fifty years ago by the Business Development Bank of Canada (BDC), Small Business Week recognizes the economic importance of Canada’s 1.2 million small and medium size enterprises.
Challenges facing small businesses
It’s tough being a small business, and tougher still in the aftermath of the pandemic. Many of the challenges small businesses face — supply chain issues, labour shortages, and regulatory complexity — were exacerbated in the past three years. And while we may be on the other side of the pandemic, half of small businesses are still in recovery and making below normal revenues.
Given how significant they are to the Canadian economy, small businesses should be given the best chance at success and supported and rewarded for their contributions to society. We’ve identified four significant challenges facing small businesses and how a shift in government policy will help businesses overcome them and stay ahead in today’s competitive global marketplace.
Labour shortages
According to the Q3 Canadian Survey on Business Conditions released by the Business Data Lab, labour challenges are a top-of-mind concern for small businesses. Most of the job losses that occurred due to the pandemic were had by SMEs.
Our policy recommendation: Government can help meet labour market needs by increasing its collaboration with provinces and territories to upskill and reskill workers. Providing Canadians with flexible, accessible, and navigable education and skills development options will foster a culture of lifelong learning and create a talent pipeline through targeted matchmaking programs.
Regulatory complexity
More than half of small businesses are microfirms (less than four employees). You can imagine that time is tight when the responsibilities of a business are shared by four people, which is why Canada’s complex regulations and tax system can feel especially burdensome on small businesses. Trying to comply with rules for interprovincial or international trade and pay the right amount of tax requires a significant amount of time and energy. Time and energy not spent on innovation or providing better customer service, or any of the things that help a business succeed in today’s competitive market. Even if a small business does have the means to hire a third party to assist with navigating the regulatory and tax system, that’s money it isn’t putting into growth.
Our policy recommendation: Easing the burden of doing business through regulatory modernization and tax reform is something we talk about a lot at the Canadian Chamber. A comprehensive independent review of the tax system, with several specific considerations for small businesses, will make it simpler and fairer. Manageable regulations that support economic growth, consider our competitiveness in the global marketplace, and ensure alignment across provinces and with international trading partners will make it far easier for small business to get their goods and services into the hands of Canadians and global customers.
Cybersecurity and the digital transformation
In today’s digitally enabled world, small businesses can’t afford to fall behind. But they often do. Researching and implementing the technologies necessary to enable better business operations can be time consuming and expensive, and there is often hesitancy around adopting newer technology, like AI. Despite AI’s powerful potential for increasing productivity and efficiency, the adoption rate for AI among small businesses is less than 6%.
Alongside the adoption of AI and the transition to remote or hybrid work comes an increased risk of cyber-attacks. Yet only 12% of businesses across all industries are planning to adopt new security software tools in 2023. With more small businesses expected to be targeted by cyber criminals in the next two years, small businesses need to prioritize their cybersecurity. Unfortunately, security is often of secondary concern to business and there is a widespread employee-knowledge gap when it comes to even the basics of cybersecurity, requiring additional training and a culture of security.
Our policy recommendation: Government should create an SME Cyber Defence Fund that provides SMEs with the support necessary to improve their cyber resilience and close the cybersecurity investment gap.
Access to data
The best business decisions are informed by timely, future-focused data, but getting that data isn’t easy and can be expensive. Without it though, small businesses won’t be able to operate at their maximum potential. Democratizing data will help small businesses thrive.
Our policy recommendation: The Business Data Lab is a key go-to for economic trends. Through new offerings like the Business Conditions Terminal, businesses of all sizes in all regions have access to a constant flow of local, future-focused and timely insights. To continue to provide this critical data to small businesses, there must be an expansion of the Business Data Labs’ partnership with Statistics Canada.
How can you support small business?
The best way to support a small business is with your purchasing power. Shop local whenever you can, and not just for products, but for services too. Chances are, there’s a small business offering online training or educational courses that could use your patronage.
But if you don’t have the ability to support them financially, here are a few other ways you can help:
- Tell your friends and family: word of mouth marketing is still the most trusted way of receiving a recommendation. A survey by Nielsen found that 92% of consumers believe their friends and family over any kind of advertising.
- Leave a review: a high number of positive reviews offers social proof that a business is trusted and recommended. Leaving reviews can also help influence a business’s SEO, making them more visible to a person searching online.
- Follow them on social media: you may not be in a position to make a purchase, but you can help them amplify their message to a larger audience by liking and sharing their content.
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