I know this is a recurring theme here but when the newspaper runs a story with the lead “Start-ups: the way to develop an economy” I feel compelled to reiterate my point.
For over 25 years the Business New Brunswick (and its precursors) and ACOA have been far and away disporportionately focused on small business support. There are hundreds of people working on this issue compared to only a handful working to attract industry here.
There are dozens of programs from youth start up funds, to trade assistance to training support to loan guarantees – the vast majority of which gets flowed to businesses with less than 50 employees.
But there is no evidence that this focus has led to a robust economy. In fact, in the last 20 years Atlantic Canada has witnessed an excelerated out-migration of people and has become more reliant on Equalization (with the exception of NL).
In addition, a few year ago I concluded research that found the changes of a small business becoming a mid or large business is far greater in Ontario, Alberta and BC where there are far less programs to support small business – than in New Brunswick.
So the title of this story is fundamentally wrong.
Of course this is a semantic issue in some respects because Gerry Pond, the person the story is built around, is not talking about fostering more ‘small business’. He is talking about fostering more ‘entrepreneurship’ – or companies that will start here but take their products and services to national and then international markets.
But, unfortanately, when policy makers and politicians see this they think “we must pump more money into the small business sector”.
As I have repeated here ad nauseum, 98% of all small business generate their entire business revenue from local or provincial markets. If we are to focus on ‘small business’ it must be the 2% that have potential beyond our borders.
Government lubricated start ups are not the way to grow an economy.
Now maybe Gerry would say that I am wrong. May Gerry believes that the government should discourage growing firms and large firms and try and induce even more small businesses. Maybe we should encourage a dislike of large businesses in favour of some Pollyannish world of small business.