Small business the key to avoiding a “dead cat bounce

Alberta’s economy has been through the wringer.

As we take our first steps out of the steepest recession in a generation, government’s top priority must be avoiding a “dead cat bounce” and ensuring that a meaningful recovery takes hold.

For those of you unfamiliar with the term, a “dead cat bounce” is a small and temporary recovery following a large fall; the metaphor being that even a dead cat will bounce if you drop it from a great height.

Alberta’s economy is now showing signs of an uptick, although full-time, private sector employment continues to lag. Taking steps to encourage our small business sector is the key to cementing our gains, and returning to sustainable growth.

The importance of the small business sector cannot be overstated. About 98 per cent of Canadian businesses are small businesses, employing more than eight million workers. Here in Alberta, small business contributes 32 per cent of our provincial GDP, above the national average.

Small businesses are more likely to directly employ youth than large businesses, and small business owners are much more likely to contribute to their communities through volunteer and charitable efforts.

When it comes to diversification efforts, small businesses are at the leading edge. According to a BDC study in Alberta, 68 per cent of small businesses offer more than one product or service line, 66 per cent have clients in more than one city, and 62 per cent avoid relying on a single major client. The reason is simple: Diversification offers real rewards in term of profit and market-share growth. According to interviews with 1,000 entrepreneurs, 25 per cent diversify in order to grow, while 11 per cent depend on diversification for survival.

Today’s small business owners are struggling in the face of changing government policies. As employers, small business owners are being asked to pay more into each worker’s Canada Pension Plan and Employment Insurance funds. At the same time, the Province has legislated a rapid increase in the minimum wage, while driving up the cost of electricity, heat, and transportation with the carbon tax. In addition, recent changes to labour regulations are causing significant upheaval for Alberta’s 11,000 eateries and bars.

It has been said that recessions begin on Bay Street, and recoveries begin on Main Street. If so, it’s time to take real steps to encourage our Mom and Pop retailers, family restaurant owners, and self employed tradesmen, folks who have endured tough times with unparalleled moxy and entrepreneurial sprit.

Just imagine what they could accomplish if government got out of the way, and let them do what they do best.

1 Response

  1. You are ABSOLUTELY correct.

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