By: Jon Cook
The sluggish Canadian economy has some local small businesses split on whether to spend now or sit tight until conditions improve.
Laura Artibello, the owner of Mailennium, a direct mail business with a staff of 15 in eastern Mississauga, has not increased her payroll since before the recession.
“Flat” was how Artibello described the last four years for her company, despite noting Mailennium’s annual revenues have declined from a peak of $1.7 million in 2007 to about $1 million this year. During that time, Artibello has been forced to diversify the business away from flyers and other business mail products, offering electronic scanning and survey-based services. While Artibello is not expanding right now, she recently initiated discussions with the Business Development bank of Canada (BDC) to obtain financing.
“There isn’t much opportunity to look for growth within the banks that could help you, but the BDC has a mandate to help small businesses,” Artibello said.
Recent data has not helped clarify the picture for small Canadian firms. A survey released last week by the Canadian Federation of Independent Businesses (CFIB) showed confidence among small and medium-sized business owners increased in September for the first time in six months. However just 18 per cent of the 918 respondents said they intended to hire in the next three to four months.
Earlier this week CFIB president Dan Kelly said many small businesses are hesitant to spend, citing uncertainty about the broader economy.
“There’s certainly a very conservative attitude out there with respect to investing money in different kinds of things,” said SSttuaarrtt LLeewiiss, president and chief executive of 5th Business, a marketing and communications firm that employs 22 full-time workers in Mississauga.
Despite the uncertainty, Lewis said he is currently hiring and upgrading the company’s computer systems in an attempt to secure new business. “Anybody who is looking to hunker down and do a whole lot of nothing allow the economy to do something to them,” he said. “If you do the best you can to be out in front of what’s happening and look for ways that you can make your business stronger and more capable to the customers you serve, I think you will be better off.”
While access to capital remains the biggest hurdle for most small businesses, Canadian commercial lending activity hit a three-year high last month. PayNet’s Canadian Business Lending Index, a gauge that tracks commercial financing to small and medium-sized businesses, rose to 166 – its highest reading since the first quarter of 2009.
The PayNet data also showed that borrowing by small business increased 22 per cent from September 2011.
“There are projects and opportunities that small business owners have postponed for a number of years because of the recession, which just cannot be postponed any longer, so that could explain why borrowing has spiked,” Cassandra Baccardax, manager of small business services for Brampton’s Small Business Enterprise Centre, said in an email.
But looking forward, Baccardax noted the bumpy economy “could keep businesses from investing in new projects, which can explain the CFIB’s comment about businesses refraining from spending.”
Pam Banks, who runs the Research Innovation Commercialization Centre that supports technology startups in Mississauga, Brampton and Caledon, said successful small companies are “very prudent in how they spend.”
Banks, whose non-profit organization launched in 2009 and will assist about 14o entrepreneurs this year, added: “it’s austerity spending as opposed to I’m sitting on cash and I’m waiting.”