Sometimes it is easy to forget about Canada’s small business owners. They are by definition small in size (1-99 employees) and there are so many of them (1.2 million as of 2021) that we don’t hear them to the same degree as large companies due to the industries fragmentation. Most of what we read about and hear about involve the multi-national brands that span the globe and have a valuation in the billions or even trillions of dollars. But we need to change that. We need to listen carefully to small business and in my opinion, create programs to assist them to remain viable as small business makes up 98% of employers and creates over 60% of jobs in Canada.
If we look back at the last four years small business has been challenged like no other time in recent history. Facing a once-in-a-century pandemic, many were forced to close their doors and pivot to online sales to try and garner as much cash flow as possible. Many small businesses failed to meet government-imposed classification as essential businesses and lost market share to larger firms. Then there was the labour shortage, supply chain issues, massive inflation, then unprecedented increases in interest rates and thus borrowing costs. Canada Emergency Business Account (CEBA) loans came due a few weeks ago. Now as customers struggle to navigate a potential soft-landing recession, small business face a tough time competing with larger companies that can sell at lower prices due to scale.
But something happened this week that piqued my interest. Home Hardware launched the new Scotia® Home Hardware PRO Visa Business Card Designed for Small Businesses. Beyond the obvious financial benefit to Home Hardware, I sensed there was something more happening here. They designed a service that made it a lot easier for small businesses (in this case professional contractors) to survive and even thrive. The card has no annual fee, a competitive variable interest rate, a 21-day interest-free grace period on new purchases, and credit limits up to $500,000.
In my opinion, more larger companies need to follow suit. By offering an incentive to small businesses, larger companies enjoy many benefits. These include increased sales and margin dollars, better reputation in the local communities they operate, greater customer loyalty and increased economic development, which creates jobs and leaves would-be customers with more disposable income to spend back in the country.
Depending on which industry the large company operates in, small business incentives could include product or service discounts, enhanced financing options, business training, hosting networking meetings and even sponsoring local start-up incubator programs to help small business take flight.
Federal, provincial and municipal governments already offer some of these services but I would suggest there is room for improvement. A strong small business environment lends well to helping governments increase employment, gross domestic product and the tax base.
As we have witnessed, our economic struggles have meant layoffs and some of those effected will start their own business to make ends meet. We need to challenge ourselves to create new products, services and programs to help these entrepreneurs become and remain successful to ensure a strong Canada.
What can your company do to set small business up for success?
Bruce Winder is a retail analyst, advisor and speaker serving a variety of clients in the retail, services and manufacturing industries. He is the author of RETAIL Before, During & After COVID-19, available on Amazon.
