National Post (National Edition)
Supercharge recovery with SMEs
The pandemic has taught us a valuable lesson about the contribution of the more than 1.1 million small and mediumsized enterprises (SMEs) to Canada’s economy. They employ some 90 per cent of private-sector workers, are in every town and city across this country, and for the most part have shut down in response to the virus.
These businesses may have felt the brunt of the lockdown but they are uniquely placed to supercharge Canada’s economic recovery as we move into post-pandemic territory. Their agility, size and direct connection to the communities they serve will enable them to come back quicker and stronger than any other sector of our economy.
Almost by definition, SMEs are owned and run by those who are willing to take risks, accrue capital and put it to work creating employment in all sectors of the economy. Together they make up a vibrant, distributed and resilient network.
It may not seem so now but the coming recovery will present an ideal opportunity to renew, innovate and explore. Businesses will take new directions and find new ways of accomplishing familiar tasks in a more efficient, cost-effective manner — areas where SMEs excel. The efficiency gains that will be unleashed by this sector will help put the economy on a strong growth trajectory.
As we emerge from COVID-19, the traits that typify SMEs will be sorely needed. They can attract capital, both foreign and domestic, and increase productivity, all while providing jobs for Canadians when they are needed most.
Our economy will begin to grow once again and our standard of living will increase accordingly. But there are lessons to be learned from the disruptions in supply chains that dramatically affected our ability to deal with the impact of the COVID-19 crisis on the economy. Think of the critical supplies needed by medical personnel, for example. It is time to identify key links in supply chains that are vulnerable to undesirable behaviour and recognize that part of the answer lies in the involvement of SMEs in a more robust and distributed supply chain.
There are several ways in which SMEs can play a larger role:
First, large companies across all business and manufacturing sectors should use SMEs to reimagine resiliency in their supply chains and to address operational issues that will enable these companies to expand operations and contribute once again to raising employment and GDP.
Second, SMEs should become more involved in the delivery of government goods, services, procurement and infrastructure. Using SMEs to accomplish government goals will require market-oriented reforms that lower firms’ fixed costs by reducing red tape and changing procurement rules and biases. Once they are freed up, SMEs’ agility will contribute to a recovery focused more on delivering goods, services and projects Canadians need, rather than offsetting their income losses.
Third, post-COVID-19, the government should review the role of government financial institutions in our economy and direct them to deliver their capital through private-sector institutions. This would make it easier for SMEs to access capital as they rebuild. Ready access through a single window will be vital as they reboot.
The goal in the post COVID-19 world should be to build up the role of private-sector SMEs. The most effective way to accomplish this will be through public-private partnerships (P3s) focused on delivery of government services and projects, which will encourage the rebirth of this vital sector of our economy, supported by financial resources made available through private-sector institutions. SMEs should be integral to P3s going forward.
A common refrain these days is that reviving the economy won’t be like flipping a switch. Maybe so but unleashing the entrepreneurial spirit of small and medium-sized enterprise owners and their employees could be the next best thing.