Recession? Time to roll out the small biz cliches

Here we go.

Let’s bring out the cliches shall we?

Andreea Bourgeois, director of provincial affairs for the Canadian Federation of Independent Business, said investing in the little guy is critical. “Small businesses are the backbone of our economy,” she said.

Businesses with fewer than five employees make up 76 per cent of New Brunswick’s companies and employ a third of the provinces workers, according to Statistics Canada. Meanwhile business with five to 49 employees make up 21 per cent of the provinces enterprises, and employ 19 per cent of workers. Large companies make up less than three per cent of New Brunswick businesses and employ 48 per cent workers.

“They employ the local people. They tend to use local suppliers. They sell to local distributors,” Bourgeois said. “So its all about pumping in the local economy, which is very important.”

 

I met Ms. Bourgeois the other day and she seems really nice and I guess she is just doing her job pushing the small business agenda. 

But what is never said – never, never, never by the CFIB is that 98% of these small businesses only do business in the province.  This is fine and normal.  But if your goal is to increase the size of the economic pie you have to find ways to either increase trade (bring more money in) or investment that leads to more trade (bring in a RIM development centre versus a new walmart).

So the government tries to find those gazelles – those small businesses that are export oriented and tries to find ways to help them grow their export markets.

But to then paper that over with the backbone comment and lump 40,000 small businesses in New Brunswick in with the few hundred that have the potential to grow the economy – is wrong headed.

And the implication is that big business is somehow not that important to the NB economy.  So in terms of setting the record straight on this I have done this analysis (published here many time).  If you take government employment (large employer) and all the contact centres (all large employers) throw in a few large retailors like Walmart over the past 10 years – you get virtually all net new job growth in New Brunswick. 

I suspect the CFIB has data to prove me wrong – they are immaculate in their number crunching but the Fraser Institute published a report saying that NB is 58th out 60 states and provinces in Canada and the USA for small business start ups.

I have always said that the best thing you could do for the 39,600 small businesss (this is a very cursory calculation but it’s for impact) is grow the large business sector.  The 39,600 do all their business in New Brunswick so the only way for their business to grow is to steal from others in their industry or see aggregate demand grow (which happens when you plop 6,000 customer contact centre jobs in Moncton over a 15 year period).

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