.jpg;w=450)
More and more small businesses across Ontario are becoming increasingly confident in about their prospects in the coming year, marking a potential sign of economic recovery, says Ted Mallett, chief economist with the Canadian Federation of Independent Business (CFIB).
As an example, Mallett points to the August edition of the CFIB's Canada-wide "business barometer" survey, which indicated its highest level of small business confidence in two years.
Ontario businesses registered a 68.6 on the index, where any number over 50 means businesses who expect their performance to be stronger the following year outnumber those who expect weaker performance. Numbers between 65 and 75 typically arise in times of economic growth, says Mallett.
Some of this confidence is the result of many companies having committed to "never again" be caught in the trap of borrowing big money to fund big capital projects, only to be surprised by a recession shortly afterwards. The economic times would then jack up interest rates and drop demand, threatening many businesses, often fatally, says Mallett.
Instead, a much more conservative approach has been taken through the last year, with many businesses refraining from going "hogwild" with borrowing, he says. While this may dampen some growth prospects, it ensures greater safety and longevity.
"Clearly, a lot of businesses were having difficulty finding adequate financing, but there are an awful lot of other businesses that are saying, 'Hey, wait a minute, I don't want to be extended to a very large degree so I'm cutting back on my line of credit exposure, or I'm going to cut back on my expenditure,'" says Mallett.
"I think that's where we've seen more of a preservation of businesses and jobs in the small business community than we did in 1990 or 1982."
While attitudes and perceptions are improving, employment plans are not. Seventeen per cent of respondents indicated an intention to add full-time jobs, with 68 per cent indicating no such plans. Fifteen per cent have plans to reduce full-time employment.
"They're not getting worse, but they're not getting massively better either. There's good news, but there's also pause for thought, and to use a sports analogy, small business is playing a defensive game."
According to Mallett's report, the biggest cost concerns for business surround taxation and regulatory costs, followed by fuel and energy costs, with wage and insurance costs tied for third.
Although the lack of domestic demand ranks as the dominant business constraint, 29 per cent of respondents also pointed to the lack of skilled labour, a concern that still resonates even amidst tough economic times.
Changes to the Workplace Safety and Insurance Board, harmonized sales tax, as well as the credit card and debit card systems are contributing to this unrest.
However, the ongoing creation of new business may help to further improve the business economy, and it's something that has emerged as a recent trend, according to Dana Jennings, coordinator with Sudbury's Regional Business Centre.
In August alone, Jennings' office assisted 37 new start-ups, as compared to the 21 seen one year prior.
This matches the 30-plus businesses being assisted through the office every month for the last three months. Although not representative of the total number of new start-ups in the region, it nevertheless stands as a positive sign for the state of small business, says Jennings.
While some interest is being expressed through the retail or the commercialization of innovations, much of this is being driven by home-based small business such as consulting, small renovation and contracting, and landscaping. These types of businesses often make use of the skills these entrepreneurs have developed for other employers prior to layoffs, and can be quickly translated into immediate self-employment.
"In harder times, it's possibly harder to find jobs, and sometimes we have to turn to making the jobs for ourselves, and entrepreneurship is a way of doing that," says Jennings. "They know they can go out and make their own money by starting their own business and doing the same type of work, or taking a hobby and making it reality."
www.cfib.ca
www.regionalbusiness.ca
