CALGARY – A new report by CIBC World Markets identifies Alberta as the most favourable place in Canada for a small business to flourish as it has the strongest projected growth, while also possessing good demographics and immigration trends.
â€œThose latter characteristics offer a steady stream of future entrepreneurs and workers to drive operations in tomorrowâ€™s small and medium enterprises,â€� said Benjamin Tal, deputy chief economist with CIBC, who coauthored the report with CIBC economists Andrew Grantham and Nick Exarhos.â€œThe province does lack an advantage in export orientation, with a concentration in Albertaâ€™s outbound flows in larger, energy-focused firms.â€�
The report, released on Monday, said Alberta and British Columbia provide the greatest advantages for startups.
â€œLooking back at the recent history, we see that small business activity outperformed the broader economy in the earlier part of the recovery, but now at the more mature stage of the cycle, things are changing and small businesses are the ones lagging the economy as a whole,â€� said Tal. â€œExports have been on the upswing, helped along the way by a meaningful drop in the Canadian dollar below parity. Just as small and medium enterprises are less responsive to a rise in the value of the loonie, they are just as insensitive to Canadian dollar weakness.â€�
CIBC said that since the recession, small businesses have been getting larger, with the number of firms with 20-49 employees up close to 18 per cent, those with 10-19 employees up by 12.5 per cent and those with less than 10 employees up by 10.3 per cent.
â€œWhile economic conditions have deteriorated for them recently, small businesses have been contributing a greater-than-normal share of hiring recently,â€� said Tal. â€œThatâ€™s partly because hiring in the rest of the economy has been muted, but small businesses have also been adding to their workforce at a greater rate than they have historically.â€�
Small businesses activity in Canada is an important part of the economy, accounting for about 40 per cent of private-sector gross domestic product, added the report.
Meanwhile, the Business Development Bank of Canada also released a new research report on Monday that looks at how Canadaâ€™s entrepreneurs can stay at the top of their game by mastering five fundamentals of business success and steering clear of five common pitfall.
The report, The Five Doâ€™s and Five Donâ€™ts of Successful Businesses, identified factors that are key predictors of business success: innovateâ€”donâ€™t rest on your laurels; ask for outside advice; have a solid plan and measure your progress; hire the best and keep them engaged â€” it takes more than money; and build strong relationships with your key suppliers.
â€œA common thread here is that itâ€™s all about the power of strong relationships,â€� said Pierre ClÃ©roux, BDCâ€™s chief economist. â€œWhether it is about the importance of seeking outside advice, hiring and maintaining good employees, or building a solid rapport with your suppliers, never underestimate the value of relationships.â€�
Five common pitfalls emerged from the analysis: donâ€™t rely on too few customers, diversify; donâ€™t underestimate the importance of effective financial management; donâ€™t leave contingency planning until itâ€™s too late; donâ€™t ignore whatâ€™s happening in your market; and donâ€™t wait too long to get help.