Check It Out: CFIB reports Canada is losing more businesses than it's creating

By Joan Janzen

During a job interview, the applicant was told his wage would increase by $1,000 a month after six months. "I'll start in six months," the applicant responded.

But seriously, over a million small businesses in Canada provide employment to Canadians. According to the Canadian Federation of Independent Business (CFIB), almost 95 per cent of businesses in Canada are small businesses. "It's very significant for Canada's economy," Kayode Southwood said when speaking on Canada's Entrepreneur podcast. Kayode is the senior policy analyst for CFIB, which represents 103,000 small businesses.

CFIB's research found that in the past six consecutive quarters Canada has been losing more businesses than it's creating. "We're seeing more business exits in Canada going to the US," he said. "About half of small business owners in the country wouldn't recommend starting a business to their own children."

He said one of the main drivers of this impact to small business in Canada is its tax landscape. CFIB released research showing the average small business pays 20 per cent more taxes in Canada.

"It's impacting businesses across the board. I know it's really pronounced in the retail sectors. They have higher costs for brick and mortar store front businesses," he observed.

Steven LeDrew interviewed Mike Dicerbo, who is a small business owner in Toronto in the manufacturing sector. Mike said we are allowing manufacturing, one of the most important industries, to wither away.

"An industry only survives if it's being repopulated by younger people. When I go to other manufacturers and suppliers, sometimes I'm the youngest guy in the factory," the middle-aged business owner observed.

He said offering encouragement to younger generations isn't enough; you also need to increase wages. "People want to get into honest trades where they can make decent money; everybody needs that," Mike said.

Recently MP Garnett Genuis pushed the government to reverse their policy aimed at cutting student grants for those attending career colleges. This policy would make it harder for young Canadians to get the skills needed for Canadian jobs. However, they voted against the motion which would help give incentives or grants for the acquisition of in-demand skills at vocational institutions. This was in spite of a unanimous vote in favour of the changes in the Human Resources Committee.

"Essentially if you're going to a vocational institution to acquire practical vocational skills — no student grant for you under the Liberal proposal. While any program of study at any university will allow you to access that grant," MP Genuis concluded.

"If we're not paying manufacturers what they should be paid, they leave," Mike warned. "Many manufacturers are my dad's age, ready to retire and let it go. I heard a statistic that about $2 trillion of wealth can't be inherited anymore. It's getting sold off," he explained.

Steven LeDrew observed that more people are going into trades; however, the manufacturing sector faces many challenges. In past years the price of steel would change two times a year, but now it changes daily.

"Our lead times to make product is sometimes 24 months, and we have to call mills that are extremely rare these days to let them know we need a million pounds of a commodity," Mike said. "It takes them 18 weeks to produce it. By the time it gets to me, I need another 6 to 8 weeks to produce the product." He also has to consider added surcharges, entrance fees and tariffs. "I can't maintain the price I did before."

Both business owner Mike and Kayode from CFIB said something needs to change. "Government needs to create conditions for businesses to succeed," Kayode said.

"We're calling on the federal government to reduce the small business tax rate from 9 per cent to 6 per cent. We want provincial governments to reduce all of their business tax rates to 0 per cent by 2030. That will create significant savings for small businesses and help them address some of the larger cost challenges they are facing," he suggested.

Mike also had suggestions to offer. "I'd tell government to get out of Ottawa and go to our manufacturing industries, walk through the plants. But they don't want the bad press; that's why they don't go," he observed.

He gave the example of Franklin Roosevelt, who came into power and had farmers and labour people in his cabinet, which helped them navigate out of the Great Depression. "We need more people like us in power, not bureaucrats that do nothing but make speeches," he said.

Meanwhile, CFIB continues to make recommendations to the government on how to address the cost of doing business, reduce red tape and look at the future of the labour market to promote confidence in the sector.