8/4/2019 2009 10 20 Vancouver Sun - Smaller Companies Weather the Ecomonic Storm

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EB.C. CALLED A HOTBED FOR NEW ENTREPRENEURS E4

TUESDAY, OCTOBER 20 | 2009 | EDITORHUGH DAWSON604.605.2520 | SUNBUSINESS@VANCOUVERSUN.COM|

SMALLBUSINESS

BY TERRENCE BELFORD

S m a l l b u s i n e s s e s a c r o s sCanada are slowly regainingtheirconfidence.

But confidence is one thing,real recovery another. How

well they are weathering thee c o n o m i c s t o r m s d e p e n d slargely what region of Canadathey arein.

Thoseare someof theinsightsgleaned bythe Canadian Feder-ation ofSmallBusiness,the na-tional organization that repre-sents105,000small businessesacross Canada, half of themfamilyowned.

August showed a definite up-tick in confidence and signs ofrecovery, says Ted Mallett,

vice-president andchief econo-mist. About 65.4 per cent ofth e 998 business w e inter-

viewed in August were moreconfident the worst was over.Their focus now is just getting

back to where they were 18monthsago.

CF IB produces a month l ysurvey that rates confidencelevels on a scale of 100. The65.4 percent figureis thehigh-estit hasreached sinceDecem-

ber when only 40 per cent ofbusinesseswere at allconfidentabout thefuture.

Confidence is strongest inSask atch ew an ( at 68.6 percent) while Quebec (66.3 percent) andOntario (64per cent)also report a more optimistic

attitude.British Columbia is the brightspot in the cross Canada pic-ture, says Brian Bonney, theCFIBsregionaldirector.

We are in recovery mode ac-cording to the numbers, hesaid. Optimism about the fu-turestartedearlierherethan inthe rest of Canada and is grow-ing.

Housing prices, which spi-ralled to among the highest inCanada in early 2008 are now

well below those levels. About46per cent ofbusinesses need-ing credit now have it versus

just 40 per cent last spring andB . C . w a s o n e o f o n l y t w oprovinces ( th e oth er beingPrinceEdwardIsland)that sawunemployment drop in August( from 8.1 per cent to 7.8 percent).

Yet CFIB said at the end ofAugust only 24 per cent of thesmall business surveyed saidthey were doing better thantheywere themonth before and46 per cent said things were

worse. Inventories, overtimeand new orders are still run-ning belownormal levelsas arecapitalinvestment plans.

Whenthe recessionhit, busi-ness sales dropped an averageof 20 per cent, we are told. To

conserve cash they stopped or-dering new stock and lived offinventory,he says.That meantnonew orderswereplacedwithmanufacturers and to safe-guard their own futures largemanufacturersstartedto layoff

workers. The biggest job losseswere among companies with500 or moreemployees.

By comparison small busi-nesses found ways to keep thepeople they had, knowing itmightbe toughto replacethemonce recovery started, saysMallett. By the end of Augustonly 15 percent of respondentssaid they planned to cut backon staff. On the flip side, how-ever, only 17 per cent look tohiringnew people.

In simple terms when youhave 10 or fewer employees

which70 percentof businessesinCanadahave youjustcanta f f o r d t o l o s e e v e n o n e o f them,Mallett says. Wefound

business owners taking paycuts themselves rather thanlayingoff people.

In Alberta the pace of recov-erywould make a snaillooklikea greyhound, suggests RichardTruscott, director of provincialaffairsfor theCFIB.

The biggest concern is thatsomething will happen and we

will start sliding backwards,hesaid.Wewentfromexuber-ance to despair last year. The

biggest continuing concerns allrevolve around the provincialgovernment.

T h e t o p t h r e e c o n c e r n samong Alberta small businessare taxes that are too high, bu-reaucratic red tape that is toorestricting and a perceived in-ability oftheprovincetopay forits extensive spending pro-grams and manage a growingdebt load.

TheTorontoDominionBankrecently issued a report thatsuggests natural gas prices,

whichare at historic lowswontproduce enough provincialroy-altyrevenuesto supportspend-ingthe province hascommittedto or to manage the provincialdebtload,he says.

Small business has hung on-to staff throughout this reces-sion butnowmanyarewonder-ing just how much longer theycan hang on. The line betweensmall business viability and

bankruptcy is sharper than inany othersector.

Thebiggestconcerns nowarew h eth er th e probl ems th atchallenged small business be-fore the recession such as achronic lack of skilled workers

willreturn alongwith recovery.We think we are on the road

back, he said. It is just goingto take us a while.

Canwest News Service

The worst is over, say 65% of respondentsto Canadian Federation of Small Business

Smallercompaniesweather theeconomic storm

NATIONAL SURVEY

BY BRIAN MORTONVANCOUVER SUN

DesireeDupuissaysthingsarefinallygettingbetter. Muchbet-ter.

Inthat,the owner ofKitsilano-based Three Sixty Financial

Group strongly reflects two re-cent surveys that concludedB.C.s small-business ownersare increasingly optimisticabout thecomingyear.

Most said business in 2009was as good or better than ex-pected.

Im definitel y optimisticabout 2010, Dupuis said in aninterview about her company,

which specializes in life insur-ance and other financial ser-

vices. It was very hard to getnew clients from February toJune. But [since then] our ca-pacity has doubled and ourscheduleis jam-packed.Theres

been at least a 50-per-cent in-crease inbusinesssinceJune.

Dupuis, who runs the compa-ny with business partner KellyStrongitharm, said clients areseeing a much improved busi-

ness climate, and that moresmallbusinessesare investing ingroupbenefit plans.

Our clients are much moreoptimistic. Otherssay the recov-ery is picking up. It seems likeits done a 180 for us since thespring.

According to the TD CanadaTrust Small Business Survey conducted among businessowners with fewer than 20 em-ployees to probe the impact of

therecessionon small business-es 53 per cent of small busi-ness owners in B.C. said they

wereexcited oroptimisticabout2010.

The survey also found that 39per cent lost some business (31per centnationally); 13 per centarein more debt than they were

12 months ago (18 per cent na-tionally); five per cent wereforced to downsize their opera-tions or staffing; and seven percent said they came close to

bankruptcy or closing. As well,14 per cent grew their businessdespite the recession and threeper centgrew their businessbe-causeof therecession.

It [the survey results] was asurprisingthing, especiallywithallthenews weve heard,ShaneLawrence, associate vice presi-dent, small business banking,TD Canada Trust, said in an in-terview.You neverknow whatsin the mind of a small-businessowner until youaskthem.[Withthis survey], theres a strongsense of how optimistic and re-silientthey are.

Lawrence said the survey isnot only an indication that the

worst of the recession is over,butalsoshowedthat65 percentof B.C.s small-business ownerssaid their performance in thepast year was either what theyhadexpectedor better.

That was slightly ahead of thenationalaverage, he added.

The TD Canada Trust surveyfollows another survey releasedearlier thismonththatalso con-cluded,among otherthings,thatB.C.s small businesses are in-

creasingly upbeat about theeconomy with confidence nowatits highestlevelssincethefirstquarterof 2008.

Westartedto seethistrend inApril in B.C. and the countrytended to follow, said BrianBonney, directorof provincialaf-fairs, B.C. forthe CanadianFed-

erationof Independent Business(CFIB). What were seeing inSeptember is that optimismtranslatinginto action,with im-proved levels of capital invest-ment. Inventories are going upand overtime is increasing.

TheCFIBsurveyfoundthat46percentof businessesin B.C.saythe overall state of business issatisfactoryand that29 percentsayitisgood.TwentypercentofB.C.businesses planto increasefull-time employment and 11per cent plan to increase part-time employment.

The CFIB survey found thattax and regulatory costs contin-ueto bethe most significantcostpressure in B.C., with 65 percent of business owners sayingthese costs are causing difficul-tiesfor their business.

According to the TD Canada

Trust survey, the impact of therecession is evident in h ow Canadian small business own-ers rate their businesses. In2009,it said,only19 percent ofownersgave their businesses an

Aor A+, downfrom 25percentin 2008. Forty-four per centgave their business a B, downfrom 50percentin 2008.

Most small-business ownersnow say they managed wellcompared to the competition,

with 65 per cent saying theyfaredas wellas theirmaincom-petitors and 28 per cent sayingtheyfaredbetter.

However,the impactof there-cessionis still anticipatedto bea

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 managinggrowth(16 percent).

As to what keeps small busi-nessowners upat night,thesur-

vey found that 31 per cent citedthe impact of the recession, fol-lowed by managing cash flow(meetingpayroll, payingsuppli-ers) at 28 per cent. These werefollowedby hiringand retainingtalent (eight per cent) and ac-cessto credit (five percent).

Lawrence said its a good signthat so many small-businessowners cited cash flow as a ma-

jor concern. This is somethingthey can manage. The couldhave said the dollar, U.S. com-petition, things they dont havecontrolover.

As to changes in the last year,40 per cent cited reduced oper-

ating costs, followedby stream-lining processes (16 per cent)and faster delivery of productsand services (nine per cent).However, 35 per cent made nochangesto their companyin thepastyear.

The TD survey of 1,002 menand women was conducted by

AngusReid Strategies fromSep-tember 8 to14.

bmorton@vancouversun.com

Survey gives strong sense of how optimistic and resilient they are

Small business owners areupbeat about the coming year

OUTLOOK

BILLKEAY/ VANCOUVERSUN

DesireeDupuis (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 theyreoptimistic about 2010.

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