canada’s top places to start and grow businesses in 2014

8/10/2019 Canadas top places to start and grow businesses in 2014

1/13

www.cfib.ca

Economics October 2014

Entrepreneurial Communities Canadas top places to start and grow businesses in 2014 Ted Mallett, Vice-President & C ief Economist!imon "a#drea#lt, !enior Economist

$ndreea %o#r eois, !enior $nal'st

No city would be a city if not for entrepreneurs. Emerging first as a result ofnatural features of the land and location, successive growth of settlements,towns and cities depended on a virtuous circle of commercial and socialdevelopment. Some entrepreneurs were attracted to the advantages of acertain location, while others saw the benefits of large and growing marketsfor their products. Those areas that grew the fastest, or the most, did so

because the commercial advantages were the greatest relative to other areas.The same was true for people; opportunity was a chief reason people cameor stayed in a community.

In principle, the process of growth applies toall communities, large and small. owever,

because each community is uni!ue"with theirown set of characteristics"conditions can varysubstantially from community to community,or ebb and flow as a result of e#ternaleconomic forces. $hanging economic drivers,technologies and consumer behaviours allhave a part in setting the path for acommunity%s development.

The common thread of development, however,

is the entrepreneurial potential of itsresidents. Nothing happens automatically. &city grows only because residents are able tomake their businesses grow"and a businessonly grows if the owner makes the decision todo so. In turn, owners only decide to grow ifthey have the resources to do it and if they

believe the investment will have sufficient payoff in the future.

This report is the seventh annual look at whatentrepreneurial characteristics $anada%slargest cities possess. 'e collect a wide rangeof data to try to capture the level of dynamismof each community and then place it on ameasurable scale. &lthough we produce cityrankings, we are not trying to define a singularconcept of entrepreneurship. Instead, we aretrying to identify the relative entrepreneurialstrengths and weaknesses of cities across thefull range of measures. No city is strong acrossthe board, but all cities have at least onerelative set of strengths.

It may seem obvious, but one of the surestsigns of an entrepreneurial hot spot is thepresence of a high concentration ofentrepreneurs and a high business start-uprate . It is also important that business ownershave high levels of optimism and success intheir operations. (ood public policy is alsocritical, so we look at the presence of


2/13

Canada(s Entre)rene#rial Cities 2

supportive local government tax andregulatory policies .

)or cities with populations of roughly *+,+++or more, $)I assembled - indicators./rawing from published and custom tabulatedStatistics $anada sources, the inde# alsocontains direct perspectives from $)I %smembership, which numbers more than-+0,+++ business owners across $anada.

Note that in defining a 1city%, we use the 1lower2case c% economic region definition rather thanthe 1upper2case $% municipal boundarydefinition. In other words, we e#amine thewhole local urban 3i.e. employment4 area,instead of 5ust the central city. This provides amore reasonable picture of entrepreneurialactivity, especially in areas where separatemunicipalities are tightly bunched.

The - indicators are grouped into 6 maincategories7

Presence is a representation of the scaleand growth of business ownership.

Perspective covers indicators associatedwith optimism and growth plans.

Policy represents indicators associatedwith the actions local governments takewith respect to business ta#ation andregulation.

Each of the - data series is recast as inde#values between -++ 3highest4 and + 3lowest4.These values are arranged in their three maingroups and then weighted to arrive at anoverall score, also a value between + and -++.Top scoring cities receive a score near the 8+mark, while low2scoring cities score closer to+.

Results:

9verall results

istorically, and for a variety of reasons, $)Ihas found entrepreneurial characteristics to bestrongest in $anada%s prairie cities and theurban areas that ring large urban cores. 'hatthey have in common is 1newness%"the prairieeconomies have only been developed in thepast -:+ years or so. 9nly a few generations

separate today%s urban prairie residents fromtheir entrepreneurial forbearers. Similarly,suburban entrepreneurs sought the benefits ofurban markets already in place, but foundoutlying areas more conducive to the structureand cost of doing business.

9ne often sees higher entrepreneurial activityin resource regions as well22althougheconomies there can suffer from wider boomand bust business cycles. )avourable resourcedevelopment conditions will attract businessesseeking to service increased activity"and,when conditions deteriorate, a strong base ofe#perienced business owners often becomesthe primary pillar of community support.

&mong ma5or centres, $anada%s overall top2ranked entrepreneurial communities in *+-fit all these main characteristics. Thecombined communities of &irdrie, ocky eripherycommunities around Edmonton 3which includeStrathcona $ounty, St, &lbert, >arkland, Spruce(rove, ?educ and other smaller municipalities4climbs to second spot. Saskatoon slipped backa little, but still held its place aboveSaskatchewan%s other ma5or city egina.@elowna is not far behind in fifth spot.

op 10 Overall scores, major cities(CMA pop ulation >150,000)

Score: (/100) C an efrom 201*

1 Cal!ar" perip#er" $0 % +*.2& ' monton perip#er" % 1 +*.* Sas+atoon , 1 -2. , -e!ina 1 +0. 5 .elo na 1 & +1. Cit" o ' monton 0 $ -0.2

$ Toronto perip#er" 5 $ -4. % 2uelp# 5 , -0.2 Cit" o Cal!ar" 5 1 +4.0

10 St 3o#n4s 5% 0 -0.1

The cities of Edmonton and $algary also makethe top ten, as do the Toronto periphery3known commonly as 1the 0+:%4, nearby(uelph, as well as St. Aohn%s. See Table - on


3/13

Canada(s Entre)rene#rial Cities *

page 0 for the detailed rankings for all -*+cities covered in the study - .

&mong mid2siBed urban areas, the prairieregion is also still well represented, including?loydminster, )ort CcCurray, (rande >rairieand ed /eer. ere, the obvious commonelement is the resource sector, which hasoffered many new entrepreneurial anddevelopment opportunities. Cedicine at isanother &lberta community in the top -+, asare $amrose and rooks, which are new to thestudy this year. &nother newcomer,$ollingwood, is 9ntario%s representative in thegroup, while Thetford Cines and Saint2(eorgestakes Duebec%s top spots.

op 10 Overall scores, mi si6e cities(CMA/CA population un er 150,000)

Score: (/100) C an erom 201*

1 7lo" minster $& , +/.0 & 8ort McMurra" % 0 9 0* Camrose $ - , 2ran e rairie $ & 9& &5 ;roo+s * -e


4/13

Canada(s Entre)rene#rial Cities 4

Mi si6e cities Score: (/*5)

8ort McMurra" & *-ou"n oran a &5 *Corner ;roo+ &*T#et or Mines &* 57lo" minster &* ,rince Al ert &* *-e


5/13

Canada(s Entre)rene#rial Cities /

The health and growth of communities have bearing on the individuals who live and workthere. esidents and those who run the localgovernments have assets planted in theground in their communities. The value ofthose assets is dependent on the level ofeconomic activity that happens around them.

(rowing communities raise property values,utiliBe infrastructure more effectively andprovide residents with a greater range ofeconomic and social opportunities. Shrinkingcommunities, however, strand peoples% built2up assets. &lthough individuals are capable ofmoving to greener pastures, moves are notcostless.

The origins of a community usually emergefrom the attributes of location"weather, aharbour, a crossroad, a natural resourcenearby. >eople converge on that location totake advantage of the opportunities"and thelower collective costs of meeting their needs.$ommunities often get their first spurt ofgrowth from the production of goods fromtheir nearby resources. 9ften it is in theproduction of goods and the businesseconomies of scale that lead to communitygrowth. ?ater, however, as the business servicesector develops and concentrates some ofthese cities see further e#pansion as they

become regional or national business centres .

>ro#imity to other cities can make a bigdifference in how a community can develop"particularly among small and mid2siBedcentres that can take on very differentcharacteristics depending on their distancefrom larger more integrated urban areas : .

$ity boundaries and government structuresare relevant, insofar that they become the

basis for data collection and measurement.ut, they are often arbitrary or meaninglessfrom an economic development standpoint. Insome cases entrepreneurship is rooted inneighbourhood characteristics; in others it

See /uranton H >uga, )rom Sectoral to )uncionalGrban SpecialiBationJ, 'ournal of (rban )conomics :8 3*++:47 6 628+.: See &kihiro 9tsuka, /eterminants of New )irm)ormation in Aapan7 & $omparison of theCanufacturing and Service SectorsJ, )conomics*ulletin , -=. 3*++=47 -28.

may be because of regional economicadvantages F.

/espite the millions of influences that affectcommunity growth, nothing would happen if itweren%t for individuals making entrepreneurialdecisions to hire, invest or innovate. The moreof those people in a community, the strongerthe growth that follows. ecause the greaterthe pool of would2be, emerging or evenseasoned entrepreneurs, the moreopportunities for them, since they often

benefit from and feed the entrepreneurialcommunity at the same time 8.

Edward (laeser%s studies = of ma5or GS citiesfind that among the many variables, includingpopulation density and industrial diversity, thetwo dominant causes of growth were -4 highnumbers of self2employed people and *4 lowcosts of business operations. e adds thatcities provide the venues for cross2pollinationof ideas, and the likelihood that someone willseiBe a concept from one type of industry andapply it to a completely different one in a newway. e sums up by saying that places whereeducated people want to live are the mostlikely to foster this type of ideas e#change.

Education and cultural activities are also worthnoting because they are commonly used asinvestment in community growth. &lthoughthere may be positive linkages in the shortterm, the long2term causal relationships arenot always clear. /o strong public institutionsgenerate 1better% cities or do strongcommunities generate 1better% institutionsK

F See osenthal H Strange, The (eography ofEntrepreneurship in the New Lork Cetropolitan&reaJ, + ,*- )conomic .olic% e!iew , /ec *++:, *02:6.8 See rad )eld, #tartup Communities" *uilding anentrepreneurial ecos%stem in %our cit% , 'iley; *+-*.= See Edward (laeser, Triumph of the Cit%" /ow urGreatest n!ention a3es (s icher #marter/ealthier and /appier , The >enguin >ress; *+-+.


6/13

Canada(s Entre)rene#rial Cities

ppendix

$)I %s entrepreneurship inde#components7

&ll these theoretical concepts provide a richlist of potential metrics on which to measureentrepreneurial !uotient of cities across$anada. In practice, however, there arerelatively few available that are clear,consistent and timely. ut even with thelimited data, there are certainly many ways tomeasure the level of entrepreneurship in amunicipality.

The )ntrepreneurial Cit% rankings aim toassess the degree to which municipalities haveenabled entrepreneurs and small businesses tostart, grow and prosper. In addition to using

various data sources from Statistics $anada,the perspectives of small business owners aretaken into consideration based on uni!ue $)Idata. Cost of the data for the followingindicators are collected on a $C&M$& basis3population of roughly *+,+++ and over4 basedon data available from Statistics $anada. Insome instances, provincial averages arederived for missingMsuppressed data. 'hereavailable, more city core and suburban datahave been included for Toronto, Contreal,resence, >erspective and >olicy, to assess thelevel of entrepreneurship in a municipality.Each of these three ma5or concepts relies onfour or five data series to arrive at an ob5ectivescore. To create consistent scales, eachvariable is standardiBed to a numeric scale of+ to -++. The city with the top data point isgiven -++, while the bottom data point is given

a Bero. The data for all other cities are thengiven the proportional value within that +2-++range. The scores are then averaged andweighted across the three ma5or categories toarrive at a total score out of -++.

>resence

*usiness establishment growth

The per cent change in businessestablishments with employees between Aune*+-6 and Aune *+- provides the most recentlook at how the number of businesses hasincreased. igher net business establishmentgrowth suggests that a municipality possessesa stronger ability to foster new or e#periencedentrepreneurs in the area. #ource" #tatisticsCanada5 Canadian *usiness .atterns5

*usiness establishments per capita

In addition to business establishment growth,it is also important to assess the level ofentrepreneurship relative to the populationsiBe of a municipality. The higher number of

business establishments per individual in amunicipality points to a greater proportion of

business leaders, more business opportunities,increased competition and the potential forhigher employment growth. #ource" #tatisticsCanada Canadian *usiness .atterns and 2011,ational /ousehold #ur!e%5

#elf6emplo%ment as a percentage of totalemplo%ment

?ooking at the proportion of individuals that

are self2employed is another indication ofentrepreneurship. & higher percentage of self2employed in a municipality shows thatindividuals have been more willing to start a

business in the municipality given the currentenvironment. #ource" #tatistics Canada5 2011,ational /ousehold #ur!e%5

nformation and cultural businesses

Information is a key component of theentrepreneurial process. Successful

entrepreneurs often see opportunities to takeideas and processes from one sector and applythem to another. &lthough there is no singleway to measure information flows ob5ectively,we think a pro#y approach is to measure therelative presence of businesses in theinformation and cultural sector, whichincludes media and publishing"the theory

being that higher numbers of information andcultural business establishments relative to


7/13


the total suggests a greater local appetite forthe e#change of information. /ata includeestablishments with employees and those thatare of indeterminate siBe. #ource" #tatisticsCanada5 'une 2014 Canadian *usiness.atterns5 ,A C# code 715

>erspective)8pected future business performance

/ata on small business confidence sheds lighton how business owners e#pect to perform inthe ne#t year based on e#pected customerdemand and local economic conditions. Thehigher the level of business confidence, the

better a municipality is at creating idealconditions for business growth in the area.#ource" C+ * -our *usiness utloo3 #ur!e%aggregate results5 'anuar% 2019 to 'ul% 20145 :*usiness *arometer nde8;5 Data e8tremes areconstrained to within the olicy

Local go!ernment ta8 balance

The most important local issue to small business owners is total ta# burden as itaffects businesses% bottom line and ultimatelyfuture business growth. >roperty ta# is one ofthe most burdensome types of ta#es for small

businesses. The total property ta# rateincludes municipal, education and othercomponents. The ta# ratio is the commercialta# rate divided by the residential ta# ratewithin the community. & low ratio indicates amore e!uitable distribution of ta#ation among

ratepayers. #ource" unicipal and pro!incialgo!ernments5 :2014 ratio of commercialpropert% ta8 rate to the residential ta8 rate;

Cost of local go!ernment

Cany businesses are concerned about howgovernment spending can affect ta#es in thelong run because a heavy ta# burden increasesoperating costs and reduces businesses%


8/13


chances of succeeding. The higher the cost ofgovernment, the greater the pressure put onta# revenues. & higher percentage of

businesses citing the cost of government as anissue would suggest that a municipality isdoing less to control spending and keep ta#esat an overall reasonable level. #ource" C+ *5

ur embers pinions #ur!e%5 'ul% 2019 to 'une 20145 :per cent of respondents whoindicate =cost of local go!ernment as a ma>orconcern for their business;5 Data e8tremes areconstrained to within the or concern for their business;5 Datae8tremes are constrained to within the al is an online source of information forpermits and licences that may be re!uired tostart and grow a business. 'ith the increasedusage of iB>al, businesses have a higherlikelihood of succeeding if given the rightinformation. There are areas that iB>al canimprove on to better serve small businesses.'hile iB>al may not be a perfect solution forall businesses, it can be a good source for a

business to refer to when first starting out.ence, municipalities are given partial scoreseven if they have not registered with iB>al todate. Cunicipalities that have registered withiB>al are allocated full scores. #ource" *i?.alwebsite http"@@www5bi?pal5ca@en@ 5


9/13


Table 1 ity Entrepreneurial Index: All Rankings. 2014

resence0 &5

erspective0 *5

olic"0 ,0

Score0 100

201*-14c

1 7lo" minster 1, % &* , *, * $& /.0& Cal!ar" perip#er" 1* 1 &* 1 *, $0 % *.2* ' monton perip#er" 10 5 && *, % % 1 *.

, 8ort McMurra" 5 0 & * ** $ % 0 .05 Camrose 10 &0 $ * * $ n 2ran e rairie 10 0 &* 1 *, 1 $ & 2.2$ ;roo+s 11 1 $ *5 0 * n% -e ictoriaville 0 &1 * & $ 5 -2.*&, 7et# ri !e 1 &1 & & 5 5 % 0.&5 Toronto perip#er" 1, * 15 & % 5 $ -4.& -iviDre u 7oup 10 0 15 1 *, * 5 -/.0&$ 2uelp# , &1 $ &% , 5 -0.2&% Salmon Arm 1& , &1 & &5 5 5 1 n& Cit" o Cal!ar" 11 1 &* 1 &, % 5 1 4.0*0 @#ite#orse 1* 15 & % 5 1 -2.2*1 ernon 11 && &, $ 5% *.** rince 2eor!e % 1 && &$ $ 5% $ 1.*, St 3o#nEs 5 &, 0 &, 5 5% 0 -0.1*5 O+oto+s 10 1 15 *& & 5$ % n* .entville 11 5 1$ % &% * 5$ -0.1*$ >al EOr $ 5 && & &$ * 5$ 0 -2.*% ;ran on $ && & , 5 0.* 8ort St 3o#n 1& % 1% &5 0 5 % 2.*

,0 S#er roo+e % $ &0 , &$ $ 5 $ -/.*,1 Timmins 5 &0 & *1 0 5 $ -/.,& ;arrie 0 &1 $ &5 5 1.,* ar+sville 1* $ 15 * &$ , 5 0.,, 2ran 8alls @in sor $ % &1 5 & % 5 & n,5 Os#a a $ , 1$ , *1 * 5 1 -0., Moose 3a &0 1 &% % 55 *.0,$ 7eamin!ton 5 &1 &% & 55 $ - .,% .amloops * && &* , 55 5 /.0, Sorel Trac" , 1 1 *& 55 2.50 Summersi e $ 1$ 5 & 55 * n51 T#un er ;a" $ 1% 5 *0 0 55 1 -4.5& .a art#a 7a+es % 1% % &$ $ 55 1 0./5* Co our! 1* 5 1& 1 & , 55 0 n5, A ots or Mission 0 &1 1 &, $ 5 -1./55 3oliette % % 15 & *0 $ 5 $ *.25 -imous+i , 1$ , &$ % 5 - .15$ Camp ell -iver 15 5 & & 5 5 4.0

5% ictoria 11 1$ % &1 & 50 5 2./%0 @in sor , 1 5 &$ , 50 * -2.4%1 ;roc+ville % & 1, 0 &$ 50 & 1.%& Fue ec Cit" % $ 1 &, $ 50 1 *.%* Corner ;roo+ 5 , &* &0 , $ 4.4

%, Otta a 10 * 1* &5 $ 5 - .2%5 Centre @ellin!ton 11 1 1, 1 &, * 5 -0.4% Truro $ 1 1& 5 & , 1 -*.%$ Saint ="acint#e % 5 1* 1 &$ , 1 -10.4%% eter orou!# & 1$ 1 && % 0 1./% Fue ec perip#er" * 1$ 1 && 0 -/.*0 e 2las!o 5 $ 1* , & 0 -4.01 Saint 3ean sur -ic#elieu $ * 1 0 &5 $ % -*.4& 8re ericton & 1* $ &5 % % -11.2* St Cat#arines ia!ara % * 1, 0 & , % % -2., C#at#am .ent % 1* % & 1 % 5 -/.45 O en Soun 10 & 1, & &, 0 % -4.4 ;aie Comeau $ 15 $ &5 % % * -11.*$ Alma & 1, 0 &% 1 % * -11.0% 7on on $ , 1$ $ &* 1 % & -2.4 ;rant or 1* 5 &% 1 % & - .0

100 or ol+ % 1* & & 0 % & -0.4101 Cit" o >ancouver 15 1 1% 1, & % 1 -2.

10& Sa!uena" 5 1$ 0 &, % 1 - .10* Saint 3o#n $ $ 1* 1 &$ & % 0 0.10, Cape ;reton * 1& , & & $ -1.0105 Su ur" 1, 5 & $ - .10 Strat or % 1, , &* & $ -0./10$ 2atineau % 1* % &* % $ * -2.010% ' mun ston 5 1 % &, $ $ 1 n10 =ali a? 11 15 * 1 % - .*110 Cit" o Toronto 1, , 1* 1% 1 -*.2111 Courtena" 10 5 15 % &0 0 * 2.11& Cran roo+ 11 , 15 % 1 0 * 0.111* Sept Gles , 1 1 $ 5 -1.*11, ;elleville $ , 1, & &* * -4.0115 Sarnia 5 , 1, 0 &5 * $ -0.11 ;at#urst 5 5 1& 0 &$ 1 - .011$ ort# ;a" $ , 1& 5 &, , * -*.411% Miramic#i 1* * &* * 5 - .211 @oo stoc+ $ 1 0 1 1 & -2.

1&0 Corn all * 1, 0 1% * & -4./1&1 Cit" o Montreal 1& 1& * 1& * *$ & -10.

3e endStrong Moderate Modest Weak


10/13


11/13


12/13


13/13


canada’s top places to start and grow businesses in 2014

Documents