Communities in Boom: Ted Mallett VP & Chief Economist Feb 19, 2013 Levering growth through entrepreneurship

About CFIB Non-partisan lobby group representing privately owned businesses 109,000 members, all industry sectors, regions 100% financed by membership, no government or sponsorship revenues

Recent CFIB accomplishments Raising public awareness of value of entrepreneurship Regulatory budget with hard targets Tax credit for expanded payrolls Protection or enhancement of small biz tax CIT Protection of lifetime capital gains exemptions. Holding lid on damaging CPP reforms Small Business Saturday

What Main Street looks like Not just the retail strip, includes industrial parks, class B office towers and rural backyards Roughly half the economy 99% of businesses An entrepreneur lives next door

SMEs defy generalization Not a homogeneous sector Leaders and followers All personality types: Forward lookers, backward lookers, child geniuses, the naïve, anti-socials, über-socials, money-driven, cause-driven, technophiles, technophobes There are winners and losers at any point of the business cycle Boom   Recession

Axioms Business churns, 30-60% every 5 years Most jobs created in next ten years will be from businesses not yet started <1% of businesses are fast growing High growth firms are more common in low and medium tech sectors How do we know? Can one pick winners? Opportunity based entrepreneurship outranks necessity- based by 6 to 1 Entrepreneurial sweet spot age 45-65

Reasons for Self-employment gains Technology for big business: doing more with fewer employees Technology for small businesses: more mobile, smaller unit sizes, better pricing Demographics Tax structure

Employment trends, by org size

Employment by size, class of worker

Employment Dynamics – Employees, 2008 Source: Statistics Canada, Longitudinal Employment Analysis Prgm, Cat M no.025

Employment Dynamics – 2008 data Source: Statistics Canada, Longitudinal Employment Analysis Prgm, Cat M no.025

Employment Dynamics – 2008 data Source: Statistics Canada, Longitudinal Employment Analysis Prgm, Cat M no.025

Employment Dynamics – 2008 data Source: Statistics Canada, Longitudinal Employment Analysis Prgm, Cat M no.025

Entrepreneurship and GDP Complex relationship -’ve correlation with factor, efficiency based economies +’ve correlation with innovation based economies Source: Global Entrepreneurship Monitor

Economy tied to small business confidence

Employment plans General state of business

Communities in Boom CFIB was approached by National Post to create an objective measurement of community entrepreneurship We questioned if it was even possible Recognized that success has many colours Step 1 capture data Step 2 organize Emphasize high scores, not low ones

Data Criteria Connection with entrepreneurship Available for all local economic regions (CMAs and CAs) Consistent over time Updated regularly Unique dimension Open to critique, new suggestions

Standardization of data Standardization ensures numbers are compared on same scale Source data: highest figure given value of 100, lowest: zero. Middle scores given relative placement within that range

Variables Presence: 25pts  % growth in #business establishments  Business establishments/capita  Self-employment / total employment  Industry diversity (goods-services mix)

Variables Perspective: 35pts  1-yr expected business performance (%resp=stronger)  3-month full-time hiring expectations (%resp=‘add’)  Overall state of business (%resp=‘good)’  #building permits issued/capita  Life satisfaction (%resp=‘satisfied’)

Variables Policy: 40pts  Concern – cost of local govt (%resp)  Concern – local govt awareness of smallbiz (%resp)  Concern – local govt regulations  Commercial /residential property tax  BizPal

Results

Results Saint John Bathurst Fredericton, Moncton Miramichi

Results Presence (25) Perspective (35) Policy (40)Total (rank) Grande Prairie AB (1) Miramichi (26) Fredericton (40) Moncton (45) Bathurst (54) Saint John (78) Sarnia ON (103)

Stay tuned – Oct 2013