Locally-owned businesses key in rural economy

This editorial appeared in the June 1, 2016 edition of the Interior News. You can download a pdf version here.

There is no doubt that locally-owned businesses are what create resilience and wealth retention in rural economies in BC.

Yet an over emphasis by the provincial government in BC, and elsewhere across Canada, on policies and programs to “attract and retain” global companies inhibits the job creation and the local spending that supporting locally-owned businesses delivers.

That is one of the messages advanced by economist, entrepreneur and prolific author Michael Shuman. He teaches in Simon Fraser University’s community economic development program and our MLA offices are promoting workshops he is holding in Hazelton and Smithers this week.

Small businesses in BC are responsible for 30% of the provincial GDP. And in Canada the highest returns in terms of profit are seen in businesses with 5-20 employees. All this points to the fact that we should be focusing more of our public policy attention on locally-owned businesses.

A 2013 investigation on the power of purchasing in BC provides a specific example of the economic impacts using local procurement as an example. In the case study, office supply purchasing was analyzed. The researchers found that when a locally-owned BC office supply business was used, 33.1% of its revenue was returned to residents and businesses in BC compared to between 16.6-18.7% when multinational competitors were used. Among the factors, the locally-owned option was found to hire more local labour, distribute more of its profits locally and buy more goods and services from local suppliers.

It’s beyond office supplies to all sectors when the benefits can really amount.

When you consider the provincial government, local governments, and other taxpayer-funded entities like Northern Health, combined are spending billions of dollars on procuring goods and services, then it only makes sense that a policy directing that towards locally-owned businesses is a better economic choice.

That is why I advocated with the BC finance minister to consider directing a portion of its $4 billion annual procurement budget to locally-owned businesses.

And it’s not just public spending but also in publicly-owned natural resources, like minerals, where locally-owned businesses and the private sector can be better connected through provincial initiatives.    

The Shuman workshops are geared for local discussion. Contact the hosting organizations:  in Hazelton, Storytellers’ Foundation and in Smithers, Nadina Community Futures for details and outcomes.