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Small Business Briefing

Proposed R&D funding reforms divide SMBs Add to ...

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When the federal government delivers the 2012 federal budget on Thursday, small business owners will be paying close attention to potential shifts in the grant and tax-credit policy.

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The tension stems from a report released last fall by a taskforce headed by OpenText Corp. chief Tom Jenkins, that urges reforms to the way the government doles out the $5-billion in research and development funding every year.

Approximately 70 per cent of funds from the SR&ED go to roughly 24,000 Canadian companies – from multinationals to startups. The report concludes that the tax credit system is unnecessarily complicated; so much so that it's common for small business owners to hire consultants to submit an application.

Some of the report's suggestions include:

  1. basing the credits solely on labour costs;
  2. reducing the 35-per-cent refundable credit for small Canadian-controlled private companies and move towards a grants-based system;
  3. dumping the savings back into more strategic and later-stage financing.

But the recommendations are not sitting well with everyone, according to The Globe and Mail's Barrie McKenna. A swath of pro R&Ders, including venture capital firms, startups and the Canadian Federation of Independent Business (CFIB), believe that Ottawa should make the program even more generous, albeit with tighter rules.

John Ruffolo of OMERS recently said, "we have one of the greatest innovation programs in the world...we should look at ideas to deliver it more efficiently and eliminate any abuse, but let’s not throw out the baby with the bath water."

Kim Ho, the founder of KYM4 and resident of Communitech Hub, views potential changes to the SR&ED program as particularly detrimental to startups in the high-tech space, which rely on this funding to operate. "Reducing refundability will evidently hurt each startup’s ability to raise capital," she wrote in a recent blog post.

The CFIB has also been vocal about its disproval, telling the Financial Post that it is "absolutely opposed" to removing some of the SR&ED funding and redirecting it toward grants and contributions programs, such as NRC-IRAP.

But amid the disapproval and rhetoric, Mr. McKenna rightly points out that, "neither Mr. Jenkins nor the federal government has even hinted at getting out of the R&D tax-credit business. Mr. Jenkins merely urged a better balance between credits and direct funding – a principle the government says it’s ready to endorse."

While this fact may not bring much relief to small businesses, the fact that changes to the R&D program are not going to be all-or-nothing may help them rest a bit easier Wednesday night.

Ten ways to leverage the power of Pinterest

Even if you don't know exactly what Pinterest is is or what it does, it's not going away anytime soon. Since its launch in March, 2010, it has grown 4,000 per cent, and has 17 million users a month. And even if the idea of having to learn a new social media tool doesn't appeal to you, it drives more referral traffic than YouTube, Google+ and LinkedIn, combined, so it's worth doing your research.

Here are ten fresh ways to take leverage its power and to boost traffic to your business and website.

EVENTS AND KEY DATES

Small Business Summit

Join speakers and fellow entrepreneurs at the next Small Business Summit being held in Calgary on April 25. The summit, brought to you by The Globe and Mail Report on Small Business in conjunction with Achilles Media, is a one-day event for entrepreneurs filled with strategies, sessions and presentations that will offer essential insights to growing your business. For more information, click here.

NYT's Make Your Pitch

The New York Times wants to hear your business pitch on video. All video pitches that meet the submission guidelines will be featured on NYT small-business Facebook page, plus, selected videos will be featured on this blog, where Carol Roth - a business strategist, and a recovering investment banker, will review them.

EDITOR'S PICKS FROM REPORT ON SMALL BUSINESS

Canadian tequila maker takes shot at big brands

Eric Brass launched Tequila Tromba with his Australian co-founder in Melbourne in 2010, after falling in love with the spirit while on exchange in Mexico. Now the signature clear-blue bottles are selling to bars across Australia and Canada and just recently started lining the shelves of the LCBO. In this edition of Inside Jobs, Mr. Brass discusses the challenges he faced out the gates, and the opportunities to come in the tequila market.

FROM THE ROSB ARCHIVES

How to make a premium brand accessible

Grey Goose vodka is quantifiably better than its competitors but ultimately it is still vodka, writes columnist Mark Healy.

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