Watch their feet, not their mouth …

as governments whistle past the graveyard of the smallest of small businesses

(3 min read)

Canadians: Forward this to your MP, MPP and MLA (see links at end of article) and every small business owner you know.

The daily talks from the federal and provincial governments are overly burdensome and their actions neglectfully incremental, as week after week slips by while they ignore a whole generation of “forgotten” businesses. The next generation, the new guys on the block, the start ups, the entrepreneurs, the moms and pops. Our governments, the stewards and purveyors of our tax dollars, are whistling past the graveyard of over 300,000 small businesses¹ (see below), indifferent to their fate. Either from a lack of understanding or just lip service concern. Giving them the benefit of the doubt, we’ll assume it’s the former.

There is a significant omission in the recently announced small business assistance programs. They do not support over 300,000 “new” businesses – the smallest of the small.

This is not an oversight, it’s a tragedy. Because it’s a hollowing out of the future of the Canadian small business sector. To apply a sport’s metaphor, it’s like letting the farm system wither and die. It’s a serious under valuing of the grassroots of 38% of GDP.

The next generation

Ignoring this generation of businesses is akin to running into a blazing house – and our economic house is up in flames – and saving the parents and forgetting the children. These companies are in every sector from retail and services to manufacturing and technology, and they are the future.

What’s the point of the government loaning hundreds-of-millions of dollars to established small businesses (three-year financial history, a threshold set by the Business Development Bank of Canada), while abandoning the burgeoning, next generation of businesses (less than 3 years)? From an investment perspective, it’s folly. It’s a short-term, high-risk, blinkered calculus. It’s the way bankers think, not entrepreneurs and true capitalists – and in a pandemic where everything is high-risk, we don’t need risk-adverse bank thinking, we need long-term, visionary, innovative thinking. Besides, the tax dollars being incrementally doled out are everyone’s dollars, and these 300,000 new enterprises have every right to get back their tax-paid money when they need it most.

Definition of a banker: Someone who gives you an umbrella when the sun is shining and takes it away when it’s raining.

Surely, Trudeau, Morneau, Ford, Phillips, et al (unlike Trump’s politicised myopia), understand that entrepreneurism, innovation, start-ups, grit, persistence, ingenuity and courage are the seeds of growth – you know, the stuff that built this country, the stuff that builds small and large businesses. The stuff that will be required to mount a recovery.

“An oak tree is just a small nut that persevered against the taunts of doubt and fear.” ― Matshona Dhliwayo

Perhaps our leaders actually don’t understand? Perhaps there’s too much big corporate-think, big-money and inherited privilege in their life-experience to truly understand the inherent value in pioneers, entrepreneurs, independent operators and mom and pop enterprises. Maybe they don’t get it?

So far, it’s self-evident

If you watch their feet, not their mouth, you can see them talking about “small business” as they walk right past the freshly dug graves awaiting the “new” businesses and start ups. This is where the economic pandemic is hitting the hardest, at the grassroots of the small business sector. At the roots of 38% of GDP.

Jason Furman, a Harvard professor of economics, and Chair of President Obama’s Council of Economic Advisers, recently said that it could be five years before we see the other side of this economic malaise. As are dozens of economists. In those next five years, the vast majority of these 300,000 businesses could thrive if the governments do the right thing – help them, not ignore them! If not … well, the vast majority will be gone, leaving our GDP with an enormous hole, dug and covered over by the cadre of politicians and business advisors who were, in fact, the gravediggers.

Do the math (these guys can)

In the next five years²:

Over the next 5 years, more than 475,000 new small businesses (employing 1-4 people) will start up in Canada (95,000/yr. x 5).
In “normal” times, 63.3% to 66.8% of these companies would still be in business in 5 years. That’s over 300,000(475,000 x 63.3%).
This represents a significant segment of the total small business sector: 1.18 million in 2017.
Here’s the tipping point. The survival rate of this cohort of new businesses will plummet if they do not receive specific, custom-tailored, financial assistance (current programs are inadequate). As many as 90% might not survive – a loss of 270,000 businesses over the next 5 years. Because they do not meet the current misguided criteria for assistance.
Without these new, replacement enterprises growing every year, the entire small business sector will shrink, significantly
Obviously, the small business contribution to GDP (38%) will be substantially reduced if the next generation of businesses become the deceased.

A giant leap

Incrementalism in a pandemic, at a time of war, is like running from Marathon to Athens in leg irons. What is needed right now is a giant leap, an order of magnitude decision, to invest in the underpinnings of our small business economy, to invest in the innovators, entrepreneurs and pioneers who will build the future, if they have the chance.

For all Canadians, if you give a damn, send this to every MP, MPP, MLA and Premier. To get you started, here’s a list of links:

Prime Minister Justin Trudeau: justin.trudeau@parl.gc.ca
Finance Minster, Bill Morneau: Bill.Morneau@parl.gc.ca
Minister of Small Business, Mary Ng: Mary.Ng@parl.gc.ca
Associate Minister of Finance, Mona Fortier: Mona.Fortier@parl.gc.ca
Ontario Premier Doug Ford: doug.fordco@pc.ola.org
Ontario Minister of Finance, Rod Phillips: rod.phillips@pc.ola.org
Ontario Minister of Economic Development, Vic Fedeli: vic.fedeli@pc.ola.org
Ontario Associate Minister Small Business, Prabmeet Singh Sarkaria: prabmeet.sarkaria@pc.ola.org
Link to your MP: https://www.ourcommons.ca/Members/en/search
Ontario Legislature: https://www.ola.org/en/members/current
B.C. Legislature: https://www.leg.bc.ca/learn-about-us/members
Alberta: http://www.assembly.ab.ca/default.htm
Saskatchewan: https://www.legassembly.sk.ca/
Manitoba: https://www.gov.mb.ca/legislature/index.html
Quebec: http://www.assnat.qc.ca/en/index.html?appelant=MC
Nova Scotia: https://nslegislature.ca/members
New Brunswick: https://www1.gnb.ca/legis/bios/59/index-e.asp
PEI: https://www.assembly.pe.ca/index.php/members
Newfoundland & Labrador: https://www.assembly.nl.ca/
NWT: https://www.ntassembly.ca/members