COLUMN

Small business on a recharge

Dian Cohen April 27 1987
COLUMN

Small business on a recharge

Dian Cohen April 27 1987

Small business on a recharge

COLUMN

Dian Cohen

The idea that government should treat taxpayers like good paying customers may appear novel to many of us. Indeed, although “quality of service” may be the fashionable buzz words in the private sector, they have not yet hit most government operations in Canada. Furthermore, deficit reduction is having an impact on agencies and departments that provide direct and often essential public services. Statistics Canada, for example, has put stiff prices on almost all of its publications.

But Statistics Canada’s product is vital—and increasingly so. The national agency has to provide Canadian data not only to policymakers but also to Canadians who need information to plan their businesses—whether those businesses involve retail sales, computer software or the hotel trade. All the more reason, then, to applaud Statistics Canada’s Small Business Database, an initiative that illustrates how more things could—and should—be done.

Next month, for the first time, people who want data on small business in about 20 sectors—including trucking and restaurants, for example—will be able to buy small, flexible, $5 reports that will actually fit their needs. These threeto four-page small-business profiles will pull together all the relevant information needed to draw up and evaluate a business plan. The Small Business Database will eventually make life easier not only for a multitude of Canadian companies but also for those who do business with them or advise them—accountants, lenders and so on. It will do this cheaply, without adding to the paper burden of small-business people, and in co-operation with all the provincial and territorial governments.

The reports are modular: if you are interested in all of them, they come together in a handy binder arrangement that you update periodically. But each page is stand-alone; if you photocopy it and hand it to someone else, it makes perfect sense by itself. As well, the Small Business Database will also offer fact sheets to facilitate market research for small firms.

Granted, most of this information is already available—except that you have to buy $500 to $600 worth of Statistics Canada reports and then weed out the irrelevant information. As a

result, many small-business people have gone without this kind of specialized information up to now. And the problem has been shared by bankers, for example, who must decide whether to grant a small-business loan on the basis of a business plan they often have no way of evaluating.

If you are planning on opening a restaurant in Moncton, N.B., for example, what is a reasonable amount of floor space to rent? What kind of earnings can you expect? Is the market growing or shrinking? Should you consider a different kind of approach based on the numbers you see?

The Small Business Database will help answer such questions. And what is particularly edifying about the project is its history of co-operation. The idea first arose six years ago as the result of pressure from three constituencies: provincial ministers responsible for small business; the federal de-

It’s no secret that most of our jobs are created by small businesses; now a new initiative offers them badly needed help

partment of regional industrial expansion; and both Statistics Canada and data-user groups, including such private-sector organizations as the Canadian Chamber of Commerce. All expressed the crying need for relevant and timely small-business statistics— at a time when the government’s fiscal belt-tightening meant that Statistics Canada had been told to get rid of about 2,000 people over a fiveor sixyear period.

The agency realized that it could not undertake a major new project without some innovative financing. As a result, it issued an “Investment Prospectus on Small Business Statistics” in November, 1985. The prospectus laid out all the potential projects, their applications and examples—and requested the financial participation of the different constituencies to get the job done. Those who agreed to come through with funding, including provincial ministries responsible for small business, were given the status of “shareholders”—and were consulted regularly on the evolution of the project by Statistics Canada, which coordinated the participation of all the

provincial, federal and private-sector interests involved.

In a country with a small population and a huge geographic area, anything that has to be done nationally presents difficulties. We need special skills and leadership to foster a spirit of accommodation and the ability to attack projects in a focused, national way. We never do. And yet the approach adopted for the Small Business Database created a climate of co-operation around the project—in sharp contrast to the bickering more typical of federal-provincial dealings. In this instance, all the provincial and territorial governments came together to create intense pressure for the kind of market-oriented, useful operational data they will now have.

We have known for some time that small businesses are doing most of the net job creation in Canada, and yet this is the first concerted effort to ease that process by providing accurate and timely information to help make decisions. And as the data become available, we will know more about how, where and why jobs are created; what works and what does not; where real growth is taking place and in what way; what regional differences mean in terms of business planning; and what financial and operating ratios are appropriate sector by sector. We will be able to track company births and deaths through the years so we can truly have our fingers on the pulse of the small-business part of the economy, where much of the growth and innovation is happening.

Life and bureaucracy being what they are, I am sure that this project did not get off the ground entirely without incident. But the point is that it got done, and the results will now be widely available. They will be immensely useful to those who want to be small-business people, those who want to advise them, market to them, lend money to them or frame policy that is relevant, in an environment of facts, not myth, rumor and folklore.

The Small Business Database illustrates how Canada can and should be a world leader in information. If we did this kind of thing all the time, we would see a big difference in our competitiveness internationally. But setting up good research projects takes time. So does the process of consultation and garnering support. The longer we wait, the harder it will be.

Dian Cohen is a Montreal based economics writer.