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SMEs harness innovation in Canada
Monday, October 20, 2003
There's a bear market rally going on around every other corner in the country.
No matter what the travails of the equities markets, small-business owners across Canada continue to find ways to harness innovation to their services and make their way into increasingly complex international markets.
With small business generating half the gross domestic product and the majority of new job creation in Canada, credit for Canada's robustness in an economically challenging year should be bestowed on SMEs, believes Michel Vennat, president and chief executive officer of the Business Development Bank of Canada in Montreal.
"I have no doubt one of the reasons the economy is doing better is because of the entrepreneurial class."
That business stratum becomes a community as the BDC, in association with the Canadian Chamber of Commerce, plays host to Small Business Week, a series of events across the country that both celebrate small business and offer consultations to further it.
With its mandate shifting from a lender of last resort to that of a bank playing a complementary role to other lending institutions, the BDC has created a range of financial instruments to support innovation and export efforts. It has also developed a significant consulting and mentoring dimension that's highlighted by Small Business Week.
"Entrepreneurs really learn more from other entrepreneurs than listening to university lecturers or speakers," Vennat says. "We see this as one of our best rewards of Small Business Week, where entrepreneurs can share ideas and share experiences."
With a theme of You're the Power Behind the Canadian Economy: Let's Share the Energy, Small Business Week was launched Sunday in Halifax with the announcement of the BDC's Young Entrepreneur Award winners and a new Ongoing Achievement Award for a former YEA recipient whose company has shown sustained growth.
"In my experience, entrepreneurs are very receptive to talking to other entrepreneurs, and that's why certain communities take off," Vennat says. "It becomes a culture.
"When I was a kid in Quebec, entrepreneurs were not considered the leaders in society," he adds. "That all changed in the last 25 years."
Some of the evidence is monetary, with the numbers emblematic of the importance now attached to the success of small business. Created by an Act of Parliament in 1944, the BDC for the first time in its history surpassed $2-billion in net authorizations for the fiscal year that ended last March.
With 6,300 loans made through its 82 branches across Canada, that figure reflected 17-per-cent growth in authorizations. What made the $2-billion milestone so remarkable, however, was the rapidity with which it was reached, only five years after the BDC finally hit the $1-billion mark after 54 years of operation.
It's a striking declaration of both confidence in, and dependence on, Canada's entrepreneurial class. Vennat believes these business people have earned it. He identifies several key reasons why Canadian entrepreneurs have weathered a time of economic uncertainty well:
Successful adaptation to the new rigours of free trade, with between 25 and 40 per cent of Canada's gross domestic product attributable to export -- all in an era where raw materials clearly don't suffice. "SMEs are getting more confident about exporting and increasingly successful at it. Most of our clients export -- and export a good deal of their product."
Hard work. No one pretends that major transitions are easy, and the trends to globalization and an intellectual capital-based economy have been as large and turbulent as any ever seen.
Canadians have tapped natural aptitudes in such crucial areas as communications and transportation and worked diligently to bring their expertise to world markets.
Investments in education. A recent visit by the BDC president to Rimouski, for example, brought out the point that there are three postsecondary institutions in the one Quebec town doing work related to the marine and fishing industries.
"At all levels, there's a lot more money being put into research and education. At the community level [schools and businesses] all work together and this partnership is paying off."
For its part, the BDC is focused on Canadian businesses narrowing the productivity gap with competing nations, and Vennat perceives a growing consensus that Canadians have to do more in this area. Working more smartly, of course, is an initiative that must come from the head of a small business.
"We're developing more and more expertise in helping improve the leadership qualities of our entrepreneurs. The smart entrepreneur hires some younger, perhaps better-educated people. But the challenge is to know how to nurture this talent and manage it."
Strong management is about the sustaining of success, celebrated by the Ongoing Achievement Award, which comes with a $20,000 grant and an extensive assessment by the BDC Consulting Group. Managing the original idea for a business isn't enough, however. The talent at the centre of the entrepreneurial effort must constantly generate business creativity. "Innovation," Vennat concludes, "is what's going to keep our economy at the forefront."
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