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The small Canadian businesses with high-growth potential and expectations might not be the ones you have in mind, says a new report from the Canadian Chamber of Commerce’s Business Data Lab (BDL).

The report, entitled Scaling Success: The Characteristics of High-Growth Small Businesses in Canada, shows that while many Canadians might think of the tech sector when thinking of firms with high-growth potential and expectations, the common characteristics for small businesses that are most likely to project high growth are, in fact, quite different. These firms typically:

• Have 5–19 employees.
• Have operated between 3–10 years.
• Are in Ontario and Quebec.
• Are based in manufacturing, accommodation and food services, or professional services.
• Are owned by immigrants or visible minorities.
• Are exporters.

The findings in the report do not come as a surprise, says Cambridge Chamber of Commerce President and CEO Greg Durocher, noting the important impact small and medium-sized businesses have on our economy. 

“A lot of people, especially those in decision-making positions of the government, look at small businesses as ‘mom and pop’ organizations on ‘Main Street’, but overlook the fact that even the major employers we have in this country today all started off as small businesses,” he says, noting the success of a previous Cambridge Chamber program several years ago that promoted small businesses called Small Business Too Big to Ignore. “Everything starts small and it’s one step at a time to reach the pinnacle of corporate success.”

According to Statistics Canada, approximately 98.6% of businesses are considered small with less than 100 employees and historically, small businesses have been a key driver of job creation in Canada, employing nearly 70% of the private sector workforce. Despite slower employment growth over the last four years, small businesses continue to account for almost (43%) of all job gains.

Greg says the government, both federal and provincial, must recognize the fact that growing small businesses is the future of economic growth and prosperity in Canada.

Stronger government connections needed

“It’s kind of like nurturing a child. You want that child to be extremely successful and we as parents do things to help that child through the growing and learning years. It’s the same thing government needs to do for small businesses,” he says, adding this is particularly key for a growing number of businesses started by newcomers. “They are coming to Canada for an opportunity and in many cases, they are starting small businesses because they have skills or expertise in other areas but can’t find work, so they create their own opportunities.”

The report details how approximately 12% of small businesses project growth of 11% or more, compared to almost 8% of medium and large businesses. Three percent of small businesses believe they can achieve “high-growth status,” defined as annual growth of 20% or more.

To help small businesses scale effectively, the report recommends public policy that targets firms’ biggest challenges by simplifying financing, reducing regulatory burdens, fostering export growth, and prioritizing upskilling.

To assist, Greg says the government needs to create stronger connections with small businesses which isn’t easy since nearly one and half million exist in Canada and that their ‘voices’ are often watered down. More often, he says decision-makers can easily connect with much larger businesses since there are fewer of them.

“In most cases they are household names and really big companies,” says Greg, noting these same companies often rely on smaller businesses as suppliers. “But the fact of the matter is that small businesses really need a hand up and support to grow to become medium sized or larger employees.”

Chambers a conduit for government

He says Chambers of Commerce, located in most communities nationwide, are the ideal conduit for government to nurture connections with those smaller operations.

“The mantra of ‘Small Business Too Big to Ignore’ is something the Chamber network should be carrying as a banner. That’s our wheelhouse. We have a personal relationship with these businesses.”

The report also underscores increased input costs, inflation, difficulty attracting and retaining labour, and weak consumer demand as key challenges to growth. The most crucial factors for growth include access to financing, the ability to export, technological adoption and a supportive policy environment.

“Canada needs more high-growth firms,” says Marwa Abdou, the report’s lead author and BDL Senior Research Director. “Years of slow economic growth, low productivity and underinvestment have weakened our global competitiveness and resulted in declining living standards for Canadians. Historically, it’s small businesses that have been a key driver of job creation in Canada.”

Click here to read the full report.

Cambridge Chamber of Commerce and Ontario Chamber of Commerce Kick-Off Campaign to put a Spotlight on Shop Local in Celebration of Small Business Week 2021.

Supporting local has never been more important and is the theme of the Ontario Chamber of Commerce’s (OCC) annual ‘Small Business: Too Big to Ignore’ Campaign’ which takes place during Small Business Week which runs October 17-23.

Throughout the week, the Cambridge Chamber of Commerce – which created the ‘Too Big to Ignore’ movement several years ago - and the Ontario Chamber of Commerce (OCC), along with 155+ chambers of commerce and boards of trade across the province, are encouraging Ontarians to support local businesses in their community as well as amplify ongoing advocacy and initiatives to promote and protect small businesses who have been hit hard by the COVID-19 crisis.

“I encourage everyone in Waterloo Region to do what they can to support and celebrate our small businesses by shopping and dining locally, not just during Small Business Week, but all year round,” says Cambridge Chamber of Commerce CEO & President Greg Durocher. “It’s very clear that small businesses are not only the heart of our communities but the backbone of our economy.”

Small and medium-sized businesses contribute significantly to our national and local economies and employ nearly 90% of Canada’s private sector workforce and 88% of Ontario’s, according to a StatsCan survey conducted over three weeks in April of 2020 in partnership with the Canadian and Ontario Chambers of Commerce.

However, that same survey showed since the arrival of COVID-19, many of these small businesses have been impacted. In fact, results indicated that 68% saw a 10% decrease in revenue and 22% said they were unable to stay fully or partially open during the pandemic, and that more than 25% feared they couldn’t stay open for more than three additional months.

This is why supporting local businesses, especially now as our economic recovery builds momentum, is imperative.

“By coming together in support of our small businesses, we can come through this time stronger and more resilient than ever,” says Greg, adding the timing of the #YouGottaShopHereWR initiative is extremely timely in relation to Small Business Week.

Created in partnership with the Greater Kitchener Waterloo Chamber of Commerce thanks to a federal grant, the initiative is encouraging all local businesses – not just Chamber members - to create a short fun video that can be posted on the YouGottaShopHereWR.ca website and shared via Instagram & TikTok using the hashtag #YouGottaShopHereWR.

“Not only do we hope to raise the profile of these local businesses but show everyone why Waterloo Region is such a great community,” says Greg.

In addition to encouraging people to shop and support local, the ‘Small Business: Too Big to Ignore’ campaign also puts a spotlight on ongoing Ontario Chamber Network advocacy and initiatives such as:

• Offering support to small businesses to help close the mental health action gap in partnership with Sun Life Financial through its "Mental Wellness in the Workplace: A Playbook for SMEs."
• Recognizing entrepreneurial diversity as a powerful strategy for Ontario’s economic recovery and long-term prosperity in The She-Covery Project: Confronting the Gendered Economic Impacts of COVID-19 in Ontario. 
• Providing practical solutions to support small businesses as they fuel Ontario’s economic recovery vis-a-vis Capital is Key: Financing Entrepreneurship in Ontario After COVID-19.
• Highlighting acute challenges facing small businesses in rural, remote & northern communities such as accessing capital being a longstanding barrier to expansion for First Nations entrepreneurs through Small Business, Big Impact. 
• Putting a spotlight on issues such as property tax rates that prevent small businesses from being able to flourish within their communities, resulting in less economic activity in Better Budgets: Bolstering the Fiscal Resilience of Ontario’s Municipalities.

“Small businesses are cornerstones of our local economies and key to thriving communities—creating jobs, driving innovation, and generating wealth for us all,” says Rocco Rossi, President and CEO, OCC.

Canadian Small Business Week takes place during the third week of October every year. This year, the celebration will occur October 17-23.