Optimism among Canadian entrepreneurs and small business owners has grown this month, according to the Canadian Federation of Independent Business (CFIB).
The CFIB announced today that its Business Barometer index, which represents the economic expectations of startups and small businesses, for January rose by 1.7 points to 64.
“When the Business Barometer is anywhere between 65 and 70, that means the economy’s growing at its potential,” says Ted Mallett, CFIB’s vice-president and chief economist. “This month, it looks like we’re getting closer.”
The findings are based on 1,178 survey responses from a stratified random sample of CFIB members. Measured on a scale of 0 to 100, an index level above 50 means owners expecting their businesses’ performance to be stronger in the next year outnumber those expecting weaker performance.
“Our barometer, in a sense, finds the average or midpoint of optimism levels,” Mallett explains. “Month-to-month variations sometimes happen. We saw a big decline in December and January was a partial correction. The long view is that optimism is still lagging slightly compared to historical patterns when the economy was growing faster.”
This month’s index shows a mixed bag. British Columbia had the highest index in the country with a 71.8 reading. Newfoundland and Labrador held steady at 68.1, the second highest reading, while Ontario’s index rose from 62.9 to 65.4. Prince Edward Island’s index rose slightly to 58.8, and little change was seen in Nova Scotia (58.1) and New Brunswick (56.6). In Quebec, there was a slight recovery of 2.4 points to an index of 56.2. However, business sentiment still remains the weakest within Quebec.
Losses were experienced by Manitoba (62.6), Saskatchewan (63.7) and Alberta (67.1).
“The gain in this month’s barometer is really fueled by Ontario, which is reporting optimism levels above the national average,” Mallett explains.
Vlad Khomutov, a Toronto-based technology entrepreneur and founder of Cover, a crowd-published social magazine, shares the entrepreneurial confidence.
“I definitely feel that 2014 is going to be a very successful year,” he says. “As a tech startup founder, my playing field— and my audience—is global, so I can go after opportunities in markets that suit my strategy, while staying in Toronto. More entrepreneurs are realizing that they no longer need to move to San Francisco to successfully launch their business. This makes it more lucrative for founders to stay in their hometowns, which boosts their local economies in return. This is the reason why some areas such as Ontario are seeing that boost.”
On the west coast, Alexandra Greenhill, co-founder and CEO of the Vancouver-based startup MyBestHelper.com, which launched a web platform that connects families with caregivers, says it’s no surprise that entrepreneurs are feeling optimistic, especially those in the technology industry.
“Tech businesses in particular are thriving in Canada as we are becoming the most cashless society in the world,” she notes. “There are more startups, and they are stronger and better positioned.”
The CFIB reports that most sectors remain close to the national average, indicating a positive trend in economic expectations. Retail and hospitality, however, are below the mid-line.
“Over the next few months, one in four businesses plans to hire more full-time staff,” Mallett says. “This is compared to the eight per cent who plan to cut back. Looking at the bigger picture, 44 per cent of owners feel their business is ‘good’, while only eight per cent say it’s ‘bad’. I think this makes it one of the more positive readings we’ve had lately.”