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B.C. CALLED A HOTBED FOR NEWENTREPRENEURS E4

TUESDAY, OCTOBER 20 | 2009 | EDITOR HUGH DAWSON 604.605.2520 | SUNBUSINESS@VANCOUVERSUN.COM|
SMALLBUSINESS
BY TERRENCE BELFORD
S mal l busi nesses across
Canada are slowly regaining
their confidence.
But confidence is one thing,
real recovery another. How
well they are weathering the
economi c st orms depends
largely what region of Canada
they are in.
Those are some of the insights
gleaned by the CanadianFeder-
ation of Small Business, the na-
tional organization that repre-
sents 105,000small businesses
across Canada, half of them
family owned.
August showed a definite up-
tick in confidence and signs of
recovery, says Ted Mallett,
vice-president and chief econo-
mist. About 65.4 per cent of
the 998 busi ness we i nter-
viewed in August were more
confident the worst was over.
Their focus now is just getting
back to where they were 18
months ago.
CFIB produces a monthly
survey that rates confidence
levels on a scale of 100. The
65.4 per cent figure is the high-
est it has reached since Decem-
ber when only 40 per cent of
businesses were at all confident
about the future.
Confidence is strongest in
Saskatchewan (at 68. 6 per
cent) while Quebec (66.3 per
cent) and Ontario (64 per cent)
also report a more optimistic
attitude.
British Columbia is the bright
spot in the cross Canada pic-
ture, says Brian Bonney, the
CFIBs regional director.
We are in recovery mode ac-
cording to the numbers, he
said. Optimism about the fu-
ture started earlier here than in
the rest of Canada and is grow-
ing.
Housing prices, which spi-
ralled to among the highest in
Canada in early 2008 are now
well below those levels. About
46 per cent of businesses need-
ing credit now have it versus
just 40 per cent last spring and
B. C. wa s one of onl y t wo
provi nces (the other bei ng
Prince Edward Island) that saw
unemployment drop in August
( from 8.1 per cent to 7.8 per
cent).
Yet CFIB said at the end of
August only 24 per cent of the
small business surveyed said
they were doing better than
they were the month before and
46 per cent said things were
worse. Inventories, overtime
and new orders are still run-
ning belownormal levels as are
capital investment plans.
Whenthe recessionhit, busi-
ness sales dropped an average
of 20 per cent, we are told. To
conserve cash they stopped or-
dering new stock and lived off
inventory, he says. That meant
no neworders were placed with
manufacturers and to safe-
guard their own futures large
manufacturers started to lay off
workers. The biggest job losses
were among companies with
500 or more employees.
By comparison small busi-
nesses found ways to keep the
people they had, knowing it
might be tough to replace them
once recovery started, says
Mallett. By the end of August
only 15 per cent of respondents
said they planned to cut back
on staff. On the flip side, how-
ever, only 17 per cent look to
hiring newpeople.
In simple terms when you
have 10 or fewer employees
which 70per cent of businesses
in Canada have you just cant
af f or d t o l ose even one of
them, Mallett says. We found
business owners taking pay
cuts themselves rather than
laying off people.
In Alberta the pace of recov-
ery would make a snail look like
a greyhound, suggests Richard
Truscott, director of provincial
affairs for the CFIB.
The biggest concern is that
something will happen and we
will start sliding backwards,
he said. We went fromexuber-
ance to despair last year. The
biggest continuing concerns all
revolve around the provincial
government.
The t op t hr e e c onc e r ns
among Alberta small business
are taxes that are too high, bu-
reaucratic red tape that is too
restricting and a perceived in-
ability of the province to pay for
its extensive spending pro-
grams and manage a growing
debt load.
The Toronto Dominion Bank
recently issued a report that
suggests natural gas prices,
which are at historic lows wont
produce enough provincial roy-
alty revenues to support spend-
ing the province has committed
to or to manage the provincial
debt load, he says.
Small business has hung on-
to staff throughout this reces-
sionbut nowmany are wonder-
ing just how much longer they
can hang on. The line between
small business viability and
bankruptcy is sharper than in
any other sector.
The biggest concerns noware
whether the probl ems that
challenged small business be-
fore the recession such as a
chronic lack of skilled workers
will return along with recovery.
We think we are on the road
back, he said. It is just going
to take us a while.
Canwest News Service
The worst is over, say 65% of respondents
to Canadian Federation of Small Business
Smaller
companies
weather the
economic storm
NATIONAL SURVEY
BY BRIAN MORTON
VANCOUVER SUN
Desiree Dupuis says things are
finally getting better. Much bet-
ter.
Inthat, the owner of Kitsilano-
based Three Sixty Financial
Group strongly reflects two re-
cent surveys that concluded
B.C.s small-business owners
are increasingly optimistic
about the coming year.
Most said business in 2009
was as good or better than ex-
pected.
I m definitely optimistic
about 2010, Dupuis said in an
interview about her company,
which specializes in life insur-
ance and other financial ser-
vices. It was very hard to get
new clients from February to
June. But [since then] our ca-
pacity has doubled and our
schedule is jam-packed. Theres
been at least a 50-per-cent in-
crease in business since June.
Dupuis, who runs the compa-
ny with business partner Kelly
Strongitharm, said clients are
seeing a much improved busi-
ness climate, and that more
small businesses are investingin
group benefit plans.
Our clients are much more
optimistic. Others say the recov-
ery is picking up. It seems like
its done a 180 for us since the
spring.
According to the TD Canada
Trust Small Business Survey
conducted among business
owners with fewer than 20 em-
ployees to probe the impact of
the recessiononsmall business-
es 53 per cent of small busi-
ness owners in B.C. said they
were excitedor optimistic about
2010.
The survey also found that 39
per cent lost some business (31
per cent nationally); 13 per cent
are in more debt than they were
12 months ago (18 per cent na-
tionally); five per cent were
forced to downsize their opera-
tions or staffing; and seven per
cent said they came close to
bankruptcy or closing. As well,
14 per cent grew their business
despite the recession and three
per cent grewtheir business be-
cause of the recession.
It [the survey results] was a
surprising thing, especially with
all the news weve heard, Shane
Lawrence, associate vice presi-
dent, small business banking,
TD Canada Trust, said in an in-
terview. Younever knowwhats
in the mind of a small-business
owner until youaskthem. [With
this survey], theres a strong
sense of how optimistic and re-
silient they are.
Lawrence said the survey is
not only an indication that the
worst of the recession is over,
but also showedthat 65 per cent
of B.C.s small-business owners
said their performance in the
past year was either what they
had expected or better.
That was slightly ahead of the
national average, he added.
The TD Canada Trust survey
follows another survey released
earlier this month that also con-
cluded, amongother things, that
B.C.s small businesses are in-
creasingly upbeat about the
economy with confidence now
at its highest levels since the first
quarter of 2008.
We started to see this trend in
April in B.C. and the country
tended to follow, said Brian
Bonney, director of provincial af-
fairs, B.C. for the Canadian Fed-
erationof Independent Business
(CFIB). What were seeing in
September is that optimism
translating into action, with im-
proved levels of capital invest-
ment. Inventories are going up
andovertime is increasing.
The CFIBsurvey foundthat 46
per cent of businesses inB.C. say
the overall state of business is
satisfactory and that 29 per cent
say it is good. Twenty per cent of
B.C. businesses plan to increase
full-time employment and 11
per cent plan to increase part-
time employment.
The CFIB survey found that
tax and regulatory costs contin-
ue tobe the most significant cost
pressure in B.C., with 65 per
cent of business owners saying
these costs are causing difficul-
ties for their business.
According to the TD Canada
Trust survey, the impact of the
recession is evident in how
Canadian small business own-
ers rate their businesses. In
2009, it said, only 19 per cent of
owners gave their businesses an
A or A+, down from25 per cent
in 2008. Forty-four per cent
gave their business a B, down
from50per cent in 2008.
Most small-business owners
now say they managed well
compared to the competition,
with 65 per cent saying they
fared as well as their main com-
petitors and 28 per cent saying
they fared better.
However, the impact of the re-
cessionis still anticipatedtobe a
big issue that B.C. small-busi-
ness owners will face in 2010,
with 30 per cent naming it the
top challenge for next year, fol-
lowed by managing cash flow
(20 per cent) and managing
growth (16 per cent).
As to what keeps small busi-
ness owners upat night, the sur-
vey found that 31 per cent cited
the impact of the recession, fol-
lowed by managing cash flow
(meeting payroll, paying suppli-
ers) at 28 per cent. These were
followedby hiring andretaining
talent (eight per cent) and ac-
cess to credit (five per cent).
Lawrence said its a good sign
that so many small-business
owners cited cash flow as a ma-
jor concern. This is something
they can manage. The could
have said the dollar, U.S. com-
petition, things they dont have
control over.
As to changes in the last year,
40 per cent cited reduced oper-
ating costs, followed by stream-
lining processes (16 per cent)
and faster delivery of products
and services (nine per cent).
However, 35 per cent made no
changes to their company in the
past year.
The TD survey of 1,002 men
and women was conducted by
Angus ReidStrategies fromSep-
tember 8 to 14.
bmorton@vancouversun.com
Survey gives strong sense of how optimistic and resilient they are
Small business owners are
upbeat about the coming year
OUTLOOK
BILL KEAY / VANCOUVER SUN
Desiree Dupuis (left), co-owner of Three Sixty Financial Group, and business partner Kelly Strongitharm say their Vancouver-based firm
has seen business pick up since the summer. More than half of small business owners in B.C. say theyre optimistic about 2010.
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