The global recession, coupled with massive public and private debt, has created a period of economic uncertainty not seen in more than a generation. The bailouts, shell games and rhetoric can’t solve the fundamental math problem: We need economic growth and jobs to pay down debt and fund program spending. It’s daunting to consider how the next generation of Canadians will be better off than we are.
The most important yet elusive question is how to create jobs for the unemployed, underemployed and new university graduates. But how to do this while global competition is intensifying, markets are quickly shifting and many multinationals are downsizing and outsourcing work overseas?
Economists say Canadians should move into more innovative and high-value work. A key strategy has been to increase enrolment in postsecondary institutions. While this is important, more is needed.
Canada needs more innovation and entrepreneurship. We need better structures to allow people with great ideas to put them to work – to start their own businesses – and to allow us to earn our way out of our individual and collective challenges. We must refocus on the same basic proposition that built this country and rely on the imagination, skill and productivity of individual Canadians to do business. With the benefit of modern technology and arguably the lowest barriers to business entry in human history, it may not be as hard as we think.
In economic terms, that means our greatest hope again rides on the ability of Canadians to put their ideas and experience to work in small businesses. Small business has always been a critical engine of employment and job growth. In 2011, it accounted for 5.1 million employees – over 48 per cent of Canadian private-sector employment. That number increases to 73 per cent if you count the self-employed, who number approximately 2.7 million. In the years between 2001 and 2011, small business accounted for an average of 43 per cent of all jobs created in Canada. A recent CIBC report found an increasing number of the self-employed pursuing this path by choice. Small- and medium-sized businesses are also important exporters, accounting for more than 30 per cent of GDP. As for the rest? Well, every large business started as a small one.
Here’s an example of how Canadian innovation and creativity can be harnessed. The Rotman School of Management has recently opened a “venture lab,” allowing students with innovative ideas from across the university to commercialize them – to start businesses with them – using leading-edge technologies. Such initiatives are necessary and should be expanded across other institutions, geographies and industries.
Moving to the next step of commercialization and profit has always been difficult. New businesses often faced significant barriers to entry, including the costs of bricks and mortar and gaining access to the tools, resources and markets so critical to success.
Today, however, the cost of overcoming entry barriers to meaningfully “get in the game” have never been lower. You can set up and operate a business from a laptop or cellphone. You can set up a virtual office with cloud computing technology. You have access to research and key information about your market and competitors. You can host global conference calls and web meetings with basic technology. Most importantly, you can reach customers worldwide on the Internet to sell your products and services. You can even seek start-up capital with online crowd funding. In other words, you can enter an industry, operate like a bigger player and grow a business globally faster, cheaper and more effectively than ever before.
This intersection of technology, falling barriers and entrepreneurship is powerful and encouraging as we look to maintain prosperity and create wealth for the future of our children and our country. A a great deal of this is already taking place in Canada, but we need to work on a national strategy and vision to harness, encourage and facilitate the continued growth of small business, and propel our economy through these uncertain times within a 21st-century model.
“If music be the food of love, play on,” Shakespeare wrote. Well, entrepreneurship (married with modern technology) has always been the food of economic prosperity – and we should play on, too.
Dany H. Assaf is senior partner in competition and international at Torys LLP in Toronto. Walid Hejazi is associate professor of international competitiveness at the University of Toronto’s Rotman School of Management.