By Joe Konecny
COVID-19 pandemic disruptions in 2020 and 2021 taught small and medium-sized enterprises (SMEs) something that the Elgin Business Resource Centre has been trying to articulate for years.
Pandemic-hardened entrepreneurs developed a new respect for risk management and contingency planning, according to the EBRC, and they’re rebounding from the slowdown with confidence and vision.
“When we’re going through the business planning process, one of the major difficult points is risk assessment,” said Sarah Foshay, the EBRC’s Assistant General Manager. “Now (as pandemic urgency begins to fade) it’s not so hard to explain any more when we’re going through the risk assessment portion because we’ve lived it.
“So, when we ask: what happens if you get sick, what’s your contingency plan; what happens if you break your leg, who’s going to run your business; what happens if we enter into another pandemic; everyone has wrapped their brains around the ‘what ifs’, and the contingency plans, and they seem to be understanding it and building that into their plans in a much more logical fashion.”
EBRC is a Community Futures Development Corporation, part of a national network of not-for-profit, community-based organizations funded by the federal government. There are 160 CFDCs across Canada, serving as a resource for SMEs and promoting economic development.
Key performance indicators (KPIs) tracked by the EBRC show 82% of the organization’s business advisory clients report creating and maintaining jobs to support their enterprises in 2022. Typically, at this point in the ERBC’s fiscal year, that figure is expected to be at the 50% level.
At the same juncture in 2020 – at the heart of the pandemic – the EBRC was only at 20% of its KPIs for clients creating and maintaining jobs, and at 20% again in 2021. In 2019, the ERBC’s KPIs were at 73% at this time of year.
“That’s a huge difference,” said Kevin Jackson, the EBRC’s General Manager. “That’s a clear indicator from our perspective that things are moving forward. Those lost two years were indicative. For Elgin County, I would say we are cautiously optimistic about the future, especially of small and medium-sized businesses.
“People are much more aware and understanding of the risk,” said Mr. Jackson. “So, no longer is it ‘what can happen?’ Now we know what can happen. Businesses can be shut down. It has happened and it could happen again … It’s made for a wiser entrepreneur.”
EBRC also reports that in 2022 it has reached 130% of its KPIs for the number of loans granted, and 170% for the dollar amount of loans. In 2021 the EBRC was at 25% of its objective for the number of loans granted.
“We are on the upswing,” said Mr. Jackson. “We have lent out well over $1-million this year so far to small and medium-sized businesses, and we’re only halfway through the year.”
Three months ago, EBRC launched a program called Digital Main Street, guiding bricks and mortar businesses to the growing online business community. Mr. Jackson said in under two months, some $67,500 in grants has been distributed to 27 businesses through Digital Main Street. “This is another indication that people are coming out of (the pandemic) a little bit more business savvy.
“With the number of inquiries we’ve been having, for new business startups and existing businesses trying to grow their business, the people that we see are optimistic,” he added. “They’re looking forward to the future. Just the sheer numbers of people we’ve had in, and the amount of interaction we’ve had with them, has all been very, very positive.”
That optimism is expected to fuel entries in the EBRC’s The Pitch, an annual business plan competition, showcasing businesses and business idea in Elgin County. Competitors have a chance to win a grand prize package, valued at $30,000 in cash and in-kind prizes to support their ventures.
Start-ups and expanding businesses across the county are encouraged to submit their business plans. The top five finalists will be invited to pitch their business plans to a panel of judges in a Dragons’-Den-styled grand finale where the winner is selected.
The deadline for interested entrepreneurs to submit entries is Nov. 30. The Pitch finale is scheduled to be held in January, 2023.
Mr. Jackson said EBRC is noticing a lot of new start-ups in the food and hospitality industry, especially with take-out restaurants and food trucks, which are least affected by COVID-19. “Are they completely out of the woods yet? Possibly not, but are they moving in the right direction, absolutely. The positivity our advisors get from those individuals is pretty encouraging.”
Light manufacturing businesses continue to do quite well, he added. Small agricultural firms are also coming back.
“I see it as a positive time for growth. If an entrepreneur really has good planning skills and really has their stuff together at this point, they will emerge from this doing well, barring any unforeseen things,” he said. “If we continue to move forward as we are right now, a really strong entrepreneurial spirit will grow.
“Think about what you see happening in Elgin County,” he continued. “You see a lot of manufacturing in Elgin County that has moved out from city centers like London. There are a lot of advantages to living in a rural area. Generally speaking, your costs are less, your community is more ‘community-based’. There are a lot of good reasons. It’s not all about Toronto.”
There are 160 CFDCs across the country. Mr. Jackson is a national board member with the CFDC as well as with Community Futures Ontario. “I get a similar sense from them as well. There’s always going to be pockets of areas that may not be moving back as quickly as others, but the general consensus I get from those two boards is also positive. They represent a very, very large percentage of business in rural Canada, that includes everything from agriculture to retail and tourism.”
He said, “Entrepreneurship is alive and well in Elgin County and beyond. Did we take a hit during COVID? Absolutely. Who didn’t, right? But what I see based on hard numbers, gut feel, and busyness about us, I see that there’s good strong reason to be cautiously optimistic moving forward regardless of what the national and international outlooks.”
StatsCan report on small and
Statistics Canada’s 2020 Key Small Business Statistics report highlights the importance of small and medium-sized businesses in the nation’s economy.
It defines businesses based on the number of paid employees: a small business has one-to-99 paid employees; a medium-sized business has 100-to-499 paid employees; and a large business has 500 or more paid employees.
As of December 2019, the Canadian economy totaled 1.23 million employer businesses: 1.2 million (97.9 percent) small businesses; 22,905 (1.9 percent) medium-sized businesses; and 2,978 (0.2 percent) large businesses.
Between 2013 and 2017, the average number of SMEs created annually was 96,580 and the average number of businesses that disappeared annually was 90,600.
On average, 35.1 percent of SMEs created in the goods-producing sector survived at least 16 years, compared with 29.6 percent of SMEs created in the services-producing sector.
As of 2019, small businesses employed 8.4 million individuals in Canada, or 68.8 percent of the total private labour force. By comparison, medium-sized businesses employed 2.4 million individuals (19.7 percent of the private labour force) and large businesses employed 1.4 million individuals (11.5 percent of the private labour force).
Between 2014 and 2019, small businesses were responsible for 35.8 percent of the net employment growth in the private sector, which increased by approximately 772,200 jobs. Medium-sized businesses contributed 25.4 percent of this net employment growth and large businesses contributed 38.8 percent.
In 2016, small businesses contributed 41.9 percent to gross domestic product (GDP) generated by the private sector, while the contribution of medium-sized businesses was 13.4 percent and the contribution of large businesses was 44.7 percent.
Over the 2012–2016 period, SMEs’ contribution to GDP was 51.1 percent, on average, in the goods-producing sector, compared with 55.7 percent in the services-producing sector.
More than half of Canada’s small employer businesses are concentrated in Ontario and Quebec (440,306 and 249,685, respectively). Western Canada has a large number of small businesses, led by British Columbia, which had 187,252 small businesses as of December 2019. In the Atlantic region, Nova Scotia has the most small businesses at 29,876.