We have just come out the ‘other end’ of Small Business Week. Despite a number of business centric events, the passing of Small Business Week goes out with the same whimper as every other special interest occasion.
Is small business still relevant, and what do we really know about this segment of the economy?
First, lets understand what small business really is. Small business is not just your corner store — it encompasses the vast majority of companies on P.E.I.
According to Statistics Canada, a business with less than 50 employees and revenues of less than $500 million is considered a small business.
There are over one million small businesses in Canada, 98 per cent have under 100 employees. On P.E.I. there were 10,359 businesses in 2011; almost 52 per cent had between one to four employees.
While business magnitudes are small on P.E.I., their impact on the economy is not. In 2011, 26 per cent of the Island GDP was contributed by small business (this is down from 33 per cent in 2001).
I feel that business ownership and entrepreneurship are vocations that more people should be encouraged to attempt. Small business is an adaptable element of our economy and a critical job creator. In 2011, 48 per cent of the private sector labour force was generated by small business. In addition, 15 per cent of all employed workers in Canada were self-employed.
If we can provide the correct support systems and encouragement for Islanders to establish a small business; each entrepreneurial Islander, statistically, would hire one to four employees.
In the pursuit of new business opportunities, we also need new ideas. If we developed programs to encourage dislocated Islanders to return with perspectives for other regions perhaps this too could increase our offerings in P.E.I.
One area of obvious disparity on the entrepreneurial field is the presence of women. For the past three decades there have been more women in our population than men. Yet despite this there is an inequity of women small business owners, according to Industry Canada only seventeen per cent of small businesses were owned by women.
The risk of failure in business is high. With limited security for making the attempt it seems few are willing to take the risk. Between 2002 to 2008 about nine per cent of new small business succeeded, this was a particularly difficult period of consecutive recession.
In general 85 per cent survive year one, 70 per cent survive two years and 51 per cent make it to five years. These odds are not attracting enough people to the vocation of business ownership; but the school of failure is hardening entrepreneurs who remain in the sector.
One persistent area of frustration for business owners is the difficulty in accessing capital. Without strong assets to offer lenders, raising money is a near impossibility. Money has never been “cheaper,” or perhaps harder to access. Between 2001 and 2012 venture capital financing was down 34 per cent; P.E.I. is the only province to see no venture financing in either of the last two years.
In this period of great economic calamity we should be aware that business, and in particular small business, have great challenges of external competition, increased taxation, declining workforce and frustration finding capital to finance growth. But these businesses are critical to our fabric and to our economy.
Whether you are in government, self-employed or seeking employment, support local small business. The P.E.I. economic ecosystem is very connected, if we let our businesses suffer the impacts will reverberate within our society.
Blake Doyle is The Guardian’s small business columnist. He can be reached at firstname.lastname@example.org.