Ambition, risk-taking and determination are the reasons entrepreneurs succeed. And their initiative and hard-work have laid the foundation for some of our most innovative products and industries, not to mention our country's high standard of living. But success also depends on governments, at all levels, providing an environment that encourages economic growth and opportunity – or at the very least, one that doesn't impede progress.
With the federal government set to table its 2014 budget on Feb. 11, we wanted to know what the country's most successful entrepreneurs would include. So we asked more than 400 members of Canada's premier leadership development program and network, QuantumShift, to offer their two cents. Here are their top five suggestions:
1. Improve competitiveness. Canada is a phenomenal place to do business: we're in a strong position globally, our proximity to the U.S. market gives us a built-in edge, and we have a wealth of human and natural resources. Still, QuantumShift Fellows told us that a variety of initiatives – from lowering trade barriers and providing training for high-demand skills to bolstering our already stellar reputation in sectors like pharmaceuticals, aerospace and financial services – could help unleash their companies' full potential for growth and innovation.
Initiatives like the National Research Council's Industry Research Assistance Program, which offers a range of technical, financial, and business advisory services to small and mid-sized companies, show the federal government is on the right track when it comes to improving Canada's competitiveness globally. Still, we should work together to further develop and tailor these, and other successful programs, so we don't lag behind actual needs.
2. Reduce taxes. It shouldn't come as a surprise that entrepreneurs, or any of us for that matter, want lower taxes even if we recognize that governments need an adequate tax base to function effectively. The truth is, while personal taxes are probably still too high, Canada has a globally competitive corporate tax rate.
Federal Finance Minister Jim Flaherty has hinted that eliminating the deficit is his government's main priority and that the upcoming budget won't include big tax breaks or significant new spending. Still, more tax incentives for growth and startups, like the United Kingdom's Seed Enterprise Investment Scheme which offers tax relief on small investments, as well as higher capital gains exemptions, can boost the amount of money that stays in the hands of entrepreneurs – and the purchasing power of customers who buy their products and services.
3. Cut red tape. The government has made strides in reducing regulatory, tax and labour policy complexity. There has, for instance, been a fair degree of harmonizing of corporate taxes, as well as provincial and federal sales taxes. But when it comes to starting up or expanding a company, or satisfying regulatory commitments, entrepreneurs still face an inordinate amount of red tape. And since few jurisdictions are knocking the issue of burdensome regulation out of the park, our government would be wise to look more closely at places like Texas. The Lone Star state has become one of the U.S.'s fastest growing states, in part by reducing government bureaucracy with initiatives that make it easier for companies to obtain permits and grow.
4. Boost R&D. Historically the government encouraged private sector investment in research and development to spur economic growth by way of tax credit grants and rebates. But policy makers now realize that supporting more industry-specific programs, including ones in health research and national defense, can move the needle further on innovation. Continued investment in transportation and community infrastructure, vital to keeping products and services flowing to businesses and consumers, are also viewed as areas where the government can effectively lend a hand.
5. Strengthen our talent base. Every year, we ask members of our incoming QuantumShift class about the challenges they face. Invariably attracting and retaining talent, particularly at senior levels, is a key concern. Recent job creation initiatives have expanded opportunities for lower-skilled work, like retail and food services, but there's still a gap when it comes to more skilled positions like engineers and mobile technology programmers.
The government can play a crucial role in helping build our high-skills bench strength through scholarships or reduced tuition tied to long-term working opportunities. Or by offering tax credits to help small and mid-sized entrepreneurial businesses secure and retain senior talent critical to their growth and success. Canada does a fair job of controlling its brain drain, but countries like Australia, the U.S. and Germany have implemented initiatives that keep more of their best and brightest within their borders. Our government would be wise to consider adopting similar measures.
While few of these suggestions will come as a big surprise to the government, they underscore the work the public and private sectors must do together to tackle the significant challenges Canadian entrepreneurs face. South of the border, the U.S. business community espouses a more laissez-faire approach, where the call is often for government to simply "get out of the way." However, Canada's business community has a more collaborative attitude and recognizes that the government has a positive, albeit limited, role to play.
Addressing these five important issues with creative new approaches and proven policies over the next few years will go a long way to benefiting the entrepreneurs who drive our economy, and help ensure Canada remains globally competitive far into the future.
Eric Morse is the associate dean of programs at the Ivey Business School. Paul Woolford is a tax partner at KPMG Enterprise with over two decades of experience advising private companies. Together they lead QuantumShift, Canada's premier executive development leadership program and network of entrepreneurs who are driving the growth of Canada's most successful private companies.