The importance of small business: Part 23
I have been saying for awhile now that the most important role of small business in a local economy is to foster competitive and dynamic local industries. Professional services is an excellent example of this. If a place like Fredericton or Moncton only had one or two architectural firms, over time the lack of competition could lead to higher prices, lower service and less innovation. A healthy mix of large and small firms creates a competitive environment and consumers/residents end up better off.
Statistics Canada tells us that New Brunswick architectural firms have consistently higher operating profit margins (as an industry) than Canada as a whole. This could mean there isn’t enough competition in that space. It’s also interesting that the architectural services sector only generates about half the revenue per capita as Canada as a whole. This most likely points to a few things such as the weaker overall economy and the unwillingness of firms/individuals to pay more for value added architectural work (such as green buildings).
I am talking mainly to local economic developers on this one. It would be interesting to do a complete review of the local industrial mix to see where there are gaps/weaknesses/higher than average profits/lower than average profits, etc. It may make sense for a local economic development agency to try and attract architectural firms in a situation where there was clearly not enough local competition.