Troy Media – by Todd Hirsch
These days, business headlines tend to be dominated by big picture stories: crisis in Europe, the U.S. debt, volatile stock markets. But lost in this ocean of alarm are the very positive stories from the businesses on the very street on which you live or work. Small businesses remain the lifeblood of many towns and communities around the province of Alberta – and their stories are too often lost or ignored.
Last week was Small Business Week, and across the province various Chambers of Commerce and other groups were celebrating the contributions made by small businesses. Leading up to Small Business Week, ATB Financial and Alberta Venture magazine partnered to prepare a survey of small business to better understand the challenges, successes, and attitudes among our entrepreneurial class. (The survey was conducted between July 7 and August 12, and included 380 participating companies with revenue between $30K and $5 million.)
Revenue still growing
The first trend identified is that small businesses in Alberta are growing. According to the survey, over two-thirds (68 per cent) of small businesses have increased their company’s revenue over the past five years. Only one-fifth saw any kind of decrease, and 13 per cent saw no change. This is extremely positive, especially considering what market conditions were like over the past five years. Between 2006 and 2011, the global economy has been knocked around pretty hard. And even Alberta’s economy experienced a severe recession in 2009. The fact that most small businesses continued to grow their revenue over the past five years speaks to their energy and vitality.
Another interesting finding is that small businesses tend to be . . . well, small. VERY small, in fact. Nearly 65 per cent of the participating businesses have five or fewer employees, and about 30 per cent have total annual revenue of less than $100k. Many of these would be self-employed proprietors. Alberta is known for its entrepreneurial spirit, and in every downturn (such as in 2009) the number of self-employed individuals soars. Layoffs from big corporations don’t keep Albertans down for long; rather than sitting around with nothing to do, they strike out on their own, often setting up professional consultancies or starting their own business with the skills and knowledge they’ve acquired. It’s a testament to the business energy pulsing through the province’s veins.
Small businesses also appear to like what they’re doing. Forty-two per cent report that the thing they enjoy most about owning a business is the pride that they can take in providing their service to the community. Independence is also important, with 20 per cent of respondents claiming that being their own boss is what they enjoy most.
But it hasn’t been all rainbows and sunshine for small businesses either. The survey reveals some serious concerns and constraints on growth, including lack of time. Small businesses are ambitious, but 60 per cent of them reported they have insufficient time to get everything done. Half of them reported not enough time to spend on “the Big Picture” of strategy and business planning.
As well, a third of small businesses are reporting shortages of skilled labour – a ghost of pre-recession Alberta which appears to be coming back to haunt businesses as the economy is picking up. Over 40 per cent report problems in retaining key employees. And about one-third of small businesses are experiencing a shortage of access to financial credit – 26 per cent report having only some of the business credit they require, and 14 per cent report no access to business credit at all.
An optimistic bunch
Yet looking ahead, Alberta’s small businesses tend to be optimistic about their prospects. Over half of survey respondents (52 per cent) plan on hiring new employees within the next six months. Nearly 29 per cent report experiencing “considerable growth” and another 35 per cent report “business is stable and maintaining market position.” Only 2 per cent expect to wind down or reduce the size of operation.
And the No. 1 area in which companies are expecting to invest over the next year? Marketing, with over 56 per cent of small businesses planning to increase their efforts. Investment in people ranks a close second. That speaks to optimism, ambition, and confidence in the product or service the business is offering.
Small businesses in Alberta are the lifeblood for many towns and communities across the province, and even in the large cities they provide employment and growth opportunities for thousands of individuals. Their flexibility to changing conditions and ability to feel the pulse of their immediate community makes them indispensible contributors to Alberta’s dynamic economy.
Todd Hirsch is Senior Economist with ATB Financial and Alberta Business columnist with Troy Media.