Canadian small businesses need to turn their attention toward exports in order to thrive and continue to contribute to the domestic economy, a new study from CIBC suggests.
Only 9 per cent of small and medium-sized companies are involved in exports, a decrease from 10.7 per cent in 2000, the bank’s annual small business report found.
The pullback comes amid years of erosion in the manufacturing sector caused by a drastic decline in the automotive industry, one of Canada's biggest exporters.
CIBC economist Benjamin Tal said in the report released Tuesday that the recent economic downturn also marked the “first pure global recession,” which particularly hurt larger companies heavily weighted in exports. Mr. Tal suggested that during the recession smaller businesses that focused on the domestic market fared better than major exporters.
But, he added, times have changed, and the same small businesses that once benefited from staying insular should now shift their focus outside Canada's borders as more opportunities emerge. “What shielded (small businesses) during the recession is impairing them during the recovery,” Mr. Tal wrote.
“Despite the accelerating pace of globalization over the past decade, the number of jobs created by (small businesses) has risen by less than 10 per cent. This is half the advance seen among larger firms.”
The CIBC report encourages further export growth, and it noted that even export-centric Canadian firms are still receiving about half of their revenue from within Canada, with a large majority of the rest coming from the United States.