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1. How does Canada rank globally for entrepreneurs?
StartupBlink, a Swiss-based website that provides data on the best places on the planet for starting a new business, has ranked Toronto’s startup ecosystem as the 11th best in the world. Three other Canadian cities made the top 100, with Vancouver ranking 19th, Montreal 34th and Victoria 95th. As a country, Canada was ranked third, after the United States and the United Kingdom, respectively.
“As an entrepreneur, it is critical to be surrounded by the opportunities that tend to exist in a startup hub,” the report stated. “Knowing which cities in your country and region offer those opportunities allows you to know where to base yourself. We also hope that some entrepreneurs will look at the lack of a startup ecosystem in their city as an opportunity to ignite one instead of moving to a bigger hub.”
2. What can a supercluster do for your business?
Experts suggest that business clusters — when related companies, organizations and talent pools are located in close proximity to each other, sometimes competing and sometimes collaborating — can improve competitiveness. We see the effects in places like Silicon Valley with high tech and Hollywood with entertainment. But can you engineer “innovation superclusters” to supersize that effect? The federal government is betting on it.
3. Surviving the eruption of trade battles
Sure, the big players are panicking these days about U.S. President Donald Trump’s protectionist predilections. This spring, Canadian steel producers face an agonizing 25 per cent tariff on exports to the U.S. But threats to Canadian exporters of all sizes are popping up all over, making it tough for business owners to predict who will be targeted next.
Canada’s solar energy sector, which supports an estimated 10,000 jobs in this country, took a big hit in January when the U.S. slapped a 30 per cent tariff on imported solar cells. Supposedly targeting China, there was no exception for Canadian products.
Three Canadian solar companies, along with a U.S. distributor, have filed a lawsuit, complaining that the tariff not only violates the North American Free Trade Agreement (NAFTA), but also flies in the face of an investigation last year by the United States International Trade Commission. The commission found Canadian products don’t “contribute importantly to the serious injury” of the U.S. solar panel industry, mostly because we don’t make so much. Despite the rapid growth of the industry here (one of the complainants, Ontario-based Canadian Solar Solutions, boasts that it created 755 new jobs in 2016), our companies provide only two per cent of solar cells and modules used in the U.S. Most are produced by Malaysia, South Korea and Vietnam.
Of course, this is exactly the kind of squabble that NAFTA is supposed to prevent. It's no wonder that almost half the Canadian small and medium-sized enterprises (SMEs) surveyed in a recent report say that the failure of NAFTA renegotiations would have a negative impact on their business.
4. Trump isn’t the only one picking fights
Last fall, the Lone Star State enacted the Texas Buy American Act, requiring large state projects to purchase iron and steel from American suppliers (unless it costs more than 20 per cent more than imports). New York State soon followed suit, with its Buy America Act that came into effect in April. This is no small thing. Canada’s bilateral merchandise trade with both states adds up to $65.4 billion annually, so the repercussions could extend far beyond iron, steel and aluminum, if things escalate. And they are already escalating. The Ontario government is introducing a bill called the Fairness in Procurement Act, which says it would create “responsive regulations … when a U.S. subnational jurisdiction enacts legislation or adopts an unfair, discriminatory policy.”
We’re venturing into tit-for-tat territory.
5. Immigrants are as likely to stick with their businesses as Canadian-born entrepreneurs
New research from Statistics Canada gives us insight into the survival patterns of immigrant-owned businesses.
Studies in Europe and the United States have suggested that immigrant entrepreneurs have higher exit rates and shorter durations of ownership than native-born entrepreneurs. In this new Canadian study, researchers found the same to be true of recent immigrants (those in Canada for less than 10 years). But they found little difference between immigrants on average and Canadian-born entrepreneurs. “Seven years after taking ownership, 56 per cent of immigrants and 58 per cent of the Canadian-born were still owners,” states the report.
Recent immigrants may not have access to the same level of wealth, networks and knowledge of business practices in Canada as longer-term immigrants or the Canadian-born, and so may be less equipped for success. Immigrant businesses in healthcare were more likely to last, while those in real estate, accommodation and food services, professional and technical services and wholesale trade often stalled sooner.
6. Feds cut taxes for small businesses
February’s federal budget will reduce the 10.5 per cent small business tax rate to 10 per cent in 2018 and to nine per cent in 2019. Businesses that earn more than $50,000 per year in passive income will gradually shift over to the general business tax rate of 15 per cent. Companies with passive income of $150,000 or more won’t qualify at all for the small business rate. The reforms are considered to be simpler than the controversial reforms the government was proposing last year.
Paul Gallant is a Toronto-based journalist and editor who writes about Canadian small- and medium-sized enterprises, international business, urban development, travel, technology and social change. His work has appeared in The Globe and Mail, the Toronto Star, Canadian Business, The Walrus and many other publications. He is executive editor at BOLD, an international travel magazine for Canadians.