As the backbones of their economies, family enterprises will lead nations into economic recovery, which is why they should be heard.
“Never let a good crisis go to waste,” Winston Churchill famously said. It could be a maxim for our times.
The coronavirus cloud may or may not have a silver lining but it has certainly activated calls for economic policy reforms from various quarters.
Ottawa has gone to great lengths in the past months to prop up businesses and individuals through a variety of pandemic relief programs. Has the time now come to heed calls from reformists?
Barring a second wave of coronavirus illnesses, we are arguably at the point where governments can start shifting their focus from economic support to economic recovery.
The implications for family businesses, which account for 63% of all private sector firms in the Canadian economy, cannot be understated.
Suffering Services Sectors
The accommodation and food services sector, second only to agriculture in terms of its high share of family-owned employers, could be hit particularly hard, which is why Ottawa and the provinces are coming to the rescue.
The Quebec government will invest $750 million into the provincial tourism industry to help boost the sector, which remains one of the industries hit hardest by the Covid-19 crisis.
Ottawa is pledging millions to promote tourism within Canada amid the pandemic. The funds include $30 million originally intended to attract foreign visitors through the federal tourism marketing agency, Destination Canada. The money will now be used to encourage Canadians to holiday locally.
South of the border, trade groups representing Maine’s hospitality and tourism sector recently pitched an $800 million state bailout plan to US federal authorities to pay for expenses related to the pandemic.
Then there’s manufacturing. The Coalition of Concerned Manufacturers and Businesses of Canada is calling for fresh investments in key public infrastructure – gateway projects such as improvements to railways, roads, bridges, ports, and other initiatives that enable Canadian companies to get their products to export markets.
It could be just the tonic for Canada’s $174 billion manufacturing sector, which represents more than 10% of GDP and 1.7 million full-time quality jobs.
Key Sector Employers
Although family-owned enterprises account for a high share of employment in several sectors, manufacturing trails far behind key industries such as agriculture, accommodation and food services, and wholesale and retail.
It’s why the CCMBC is seeking the allowance of full tax credits for capital investments in new equipment, machinery, and technology applications, which it rightly says will help boost the economy.
The lobby group’s report coincides with a new RBC study in which the bank sets out a five-point plan to help small businesses “make a big pivot” to a post-pandemic economy.
A key point is the streamlining of relief programs for the recovery. While Ottawa has committed a “historic amount” of funds to small business, RBC says some initiatives are too complicated or too dependent on debt instruments.
I have been impressed by the innovative spirit shown by Canadian businesses
Canadian businesses have had a decidedly “can-do” attitude throughout the pandemic. They are reopening. They have been preparing. They have discussed best practices with their industry associations.
The Canadian Chamber of Commerce has released a national business guide for re-opening the economy. “Despite all the challenges, I have been continually impressed by the innovative spirit, cooperation and resilience shown by Canadian businesses as they navigate this crisis,” Chamber CEO Perrin Beatty says.
Those are inspiring words, and indeed more optimistic than what we have heard from pandemic politicians.
It could be worse, just look south of the border, where a staggering $4 trillion in emergency federal funds made available to big corporations has divided opinion in a nation reeling from one crisis to the next.
Formidable Families Businesses
The federal stimulus bill, say American critics, will dramatically accelerate corporate concentration to the detriment of the US’s 28.8 million small business, 19% of which are family-owned.
“It opens up a massive spigot of easy cash for the largest corporations, while consigning small businesses to a slow and cumbersome process of applying for loans from a limited pool of funds,” says Stacy Mitchell, director of the Institute of Local Self-Reliance.
There are more than 5.5 million family businesses in the US, which generate 57% of the country’s GDP and employ more than 98 million people, some 63% of its workforce.
Is it time their needs were better met? If family business expert Dale Caldwell gets his wish, US lawmakers would provide immediate tax credits to family businesses that hire new employees during the pandemic, and approve job retention loans to prevent business failures and lay-offs.
Writing in Family Business, Caldwell points out that because most US family businesses are small, they receive little tax and regulation relief and have thin profit margins. They are the nation’s largest employers yet have little policy influence in Washington, DC.
Perhaps it is time for that to change. Canada may already be leading the way.