Small business is on the comeback in the local region, a new report shows.
The provincial government has just released its annual Small Business Profile document, based on data compiled from Statistics Canada and BC Stats.
Since 2007, the region has lost 1,000 small businesses but between 2011 and 2012 the numbers turned around and went up 3.2 per cent. Chamber of Commerce CEO Christie Ray said she is confident that in a year's time the 2013 numbers will show growth again.
"One of the theories I hold is, in the past few years our region has had an influx of money and resources into it and the small business numbers are starting to show a reflection of that investment," she said. "Also, our region is becoming more of a global marketplace and investors want a piece of that. Companies are coming in to compete. Some of our local companies are finding it harder in some cases, but there are huge resources available for local small business to remain competitive."
Ray said the Western Economic Diversification program, new provincial government assistance in the procurement process, the groundwork done by organizations like Initiatives Prince George, Northern Development Initiative Trust, Community Futures, the Innovation Central Society and more "are working towards local businesses being more competitive in the global marketplace."
Ray also pointed out that she knew of at least two companies that had merged, in the past year, meaning that now counted as only one in the numbers but combined were doing a more lucrative business than as two.
Also, "this area is going through a demographic shift at the same time as the economic downturn, so it might look like a lot of businesses didn't make it, and for sure some went bankrupt, but a lot closed before it got to that point and in many, many cases the owners closed because it was time for them to retire but there was no one interested in taking it over."
A movement is now on to attract skilled workers to the region, she said, but also to attract entrepreneurs to fill business opportunities.
Across the province in 2012 compared to 2011, the number of small businesses grew by 1.1 per cent and the overall number of employees grew by .4 per cent which was double the national average.
"There were approximately 385,900 small businesses operating in British Columbia in 2012,
accounting for 98 per cent of all businesses in the province," said the authors of the report. "About 82 per cent of these small businesses were micro-businesses with fewer than five employees [55 per cent had only one employee: the owner]. With 83.5 small businesses per 1,000 people, British Columbia ranked first in the country in terms of small businesses per capita in 2012. The national average was 69."
The large-business sector posted positive numbers for the first time in more than five years, with seven per cent growth in 2012. The presence of large businesses often triggers the emergence of small businesses to service those industries.
SMALL BUSINESS MONEY
As a percentage of private sector employment, B.C. is among the top three provinces in Canada with about 55 per cent of private sector positions being with small business operations.
Also, B.C. led the nation in terms of money paid in wages to small business employees, as a percentage of the entire workforce's income (almost 32 per cent).
The same stat does show, however, that small business wages are therefore less than what big business can pay.
"On average, large businesses traditionally have paid their employees more compared to small businesses," said the Small Business Profile report. "Small businesses make up much of this wage disparity in other ways by offering benefits that may not be possible in some larger businesses, such as more flexible hours."
The average small business employee earned $39,210 in 2012, compared to $48,318 for employees of large business.
"Part of the wage gap is likely related to productivity," said the report. "Larger firms can take advantage of economies of scale and they can better afford necessary capital improvements, such as machinery and equipment that can substitute for low-skilled labour, allowing them to be more productive than small businesses. As a result, larger firms tend to achieve more output per employee and can consequently afford to pay their employees higher wages. Another possible factor is that small businesses are much less likely to be unionized. In general, employees who belong to unions tend to earn higher wages than non-unionized employees."