Small businesses are essential to the Canadian economy. As of December 2009, they accounted for 98 per cent of all businesses and employed approximately 5 million people or 48 per cent of the total labour force in the private sector. They are the engines of the economy, and according to a new survey, Canadians are only to happy to fuel that engine. 89 per cent of us actively support small businesses in our communities.


More attentive, personal and friendly service topped the list. Almost as important were a personal relationship with the business owner, better quality or unique products, and a faster shopping experience.

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This support is not taken for granted by business owners. They say they get a lot of satisfaction from the personal connection with their customers; their businesses give them a sense of pride and accomplishment and allow them to donate their time and money to charities, sports teams or cultural events.

But first and foremost, a small business is a way to earn a living. No one quits their job, mortgages their home, and steps into the unknown just to scrape by. That sets the bar too low. The real goal is to succeed; to become the next Jim Balsillie or Ted Rogers. In fact, rapid growth companies can be found right across Canada. More importantly, fast growing companies are distributed evenly across every major sector of the economy.

Successful small and medium-sized business are the ones that get the basics right. That ranges from strong management skills, employing skilled labour, good marketing, high-quality customer service, flexibility to customer needs and product quality. Excelling in these areas is essential for survival. What about companies that meet these benchmarks and go the extra mile? The truly successful companies tend to be more productive and innovative. They do more research and development, access new markets, adopt new technologies and are more innovative with their products.

It's a well established belief that American companies tend to beat Canadian ones in terms of productivity. You might think it's because of the fact that a greater share of the Canadian economy is comprised of small businesses. Those small businesses lack the scale and money to invest in R&D. But it isn't so black and white. According to analysis by Industry Canada, the share of small- and medium-sized companies in Canada doing R&D was 1.1 per cent and 10.3 per cent in 2002. That's more than the 1 per cent and 6.1 per cent that the U.S. could muster. R&D intensity by Canadian companies was less than their U.S. counterparts, but the greatest difference was among large firms; not small- or medium-sized companies. Smaller firms tend to be both productive and nimble. The best ones constantly strive to introduce product and process innovations, as well as evolve their business model.

It may not feel like the best time to invest capital and pursue innovations during an economic slowdown. But the picture isn't as grim as one might think. Interest rates may rise, but many economists believe they could remain quite low for longer. The effective tax rate on capital has also fallen in recent years. Strong bank balance sheets suggest that the supply of credit should be available to meet a business' needs. And the Canadian dollar is also expected to remain close to parity, limiting the cost of imported machinery and equipment.

It seems clear to me that Canadians love small businesses. It's no wonder we're proud of the success stories. The data clearly shows that many Canadian small- and medium-sized businesses strive to innovate and invest in new technologies. Many of these firms are more productive and more innovative than larger, better funded companies. It's the underdogs that are taking the leadership role and driving the economy forward. As more and more business owners become aware of the importance of innovation, they will open the door to greater growth and prosperity, for all Canadians.

Pattie Lovett-Reid is the host of the Pattie Lovett-Reid Show which airs on CTV News Channel from 8 to 8:30 p.m. ET and on from 8:30 to 9 p.m. ET.