Sky’s the limit for small business exporters

This op-ed originally appeared in The Hill Times

By Jacquie LaRocque

OTTAWA—Everyone knows that small- and medium-sized businesses are the backbone of the Canadian economy, employing about one-third of our population.

What’s less well known is the struggles that SMEs have had over the years raising their game to tap into markets beyond our border.

Only 11 per cent of SMEs are engaged in exporting, a significant concern in a country as export-reliant as Canada, the fiscal update shows. 

Seldom has a speech related to the economy been heard in the capital without a reference to the need to harness their potential to export, especially in light of the volatile trade policies of the Trump administration.

The federal government’s decision to back up these words with significant support for SME exporters in the fall economic statement should be warmly welcomed.

Done correctly, this strategy holds out enormous potential.

Finance Minister Bill Morneau just earmarked $1.1-billion over six years for an export diversification strategy intended to boost sales abroad by improving trade infrastructure, beefing up on-the-ground trade services and helping more businesses develop export capacity.

This investment, plus the pro-growth policies for SMEs already undertaken by new Small Business and Export Promotion Minister Mary Ng, are exactly what Canada needs right now. But the actual outcome will, of course, hinge on the federal government’s ability to deliver these programs in an efficient, practical way that meets the needs of SMEs.

To be successful, the programs must be part of a culture shift across government in which support for SMEs is consistently prioritized. In particular, the government needs to ensure that officials are committed to understanding the unique challenges faced by smaller companies when it comes to accessing and successfully using federal assistance measures.

As Minister Ng has pointed out, one of the main problems is linking entrepreneurs, export opportunities, and government support services. Ng, who grew up in a small, family business, has said she knows from experience that small business owners are often too busy to think about accessing a new, faraway market. And many SMEs say the same goes for figuring out how to navigate the various federal departments, agencies, and programs offering different kinds of export assistance.

Another long-standing problem for SMEs has been the difficulty in obtaining capital needed to expand and grow. As well, SMEs need advice on how to export outside North America. Regulatory red tape is also a serious hindrance.

The finance minister announced an array of measures, including an investment of $100-million over six years in SME-related initiatives to start to address these issues.

Pivotally, the government will be expanding CanExport, a key support program, and other funding initiatives to provide backing for export-minded SMEs, including funding for participation in trade shows and trade missions, market research, legal fees, and adaptation of marketing tools. This is primarily aimed at companies hoping to take advantage of the opportunities arising from Canada’s new free-trade pacts in Asia and Europe.

SMEs will also benefit from a range of other new initiatives, including upgraded advice and services by the Canadian Trade Commissioner Service, a concerted effort to remove regulatory obstacles and various educational, mentoring, and other capacity-building programs for would-be SME exporters.

A proposed partnership with many Canadian banks intended to more readily link businesses with federal support programs should also be of benefit.

Importantly, these support programs are designed in particular to link into the government’s wider aim of supporting and incentivizing women entrepreneurs. Only 16 per cent of Canada’s SMEs—like mine—are currently owned by women, according to government statistics.

Viewed as a whole, these initiatives are a valuable follow-up to the federal government’s decision in July to give three cabinet ministers—including Ng, International Trade Diversification Minister Jim Carr, and Global Affairs Minister Chrystia Freeland—responsibility for promoting new export sales beyond the U.S. market.

It is also much-needed recognition of the needs of SMEs in the export context. And, as a female owner of a small business, I am greatly encouraged by Ottawa’s commitment in the administration of these programs to prioritizing support for women entrepreneurs—part of the government’s goal under the Women Entrepreneurship Strategy of doubling the number of women-led businesses by 2025.

Canada’s free-trade agreements in Europe and Asia have provided no less than one billion potential new customers. And the federal government is hoping to enlist Canadian companies, particularly SMEs, in a wholesale revamping of the country’s trade posture and ambitions.

Of course, Canadian exporters have always been attracted to the U.S. export market next door and SMEs, for a variety of reasons, have been slow to pursue overseas sales.

Change no doubt requires time. But the federal government has taken significant steps to open the way toward a new national export mindset with increased business strategies based on the pursuit of fresh markets, particularly in Europe and the fast-expanding Asian region.

The opportunity is there for tremendous growth and a much-expanded export dimension that could contribute significantly to the country’s long-term prosperity. But it’s up to us in the SME sector to step up and take advantage of these great opportunities. Otherwise, we’ll be passing up a chance to scale up our operations. And Canada will be tethered for years to come to the U.S. market.

Jacquie LaRocque is principal of Compass Rose, a public affairs and government relations firm specializing in small and medium enterprises.