Mediaplanet: What classifies a company as a small business?

Dan Kelly: The most common definition of small business is based on the number of employees. Typically, a small business is defined as having 50 or fewer workers, and a medium-sized firm has between 50 and 500. Given that the vast majority of businesses are small, more people suggest a small firm has fewer than 20 workers. For us at the Canadian Federation of Independent Business (CFIB), 85 percent of our 109,000 members have fewer than 20.

MP: How important are small businesses to Canada’s economy?

DK: Small business is big in Canada. Of the 1.1 million businesses with paid employees in Canada, 97 percent are small. In fact, it often surprises Canadians to learn that two-thirds of businesses have fewer than five employees. From an employment perspective, over half of Canadians own or work in a small or medium-sized business.

MP: What are some of the most pressing issues surrounding small businesses?

DK: There sure are a lot these days. Beyond the broader challenges of NAFTA uncertainty and low commodity prices, most of the major problems the small business community is facing are caused by the federal and provincial governments. Currently, the small business community is on red alert with proposals to fundamentally change the small business corporate tax structures that have been in place for over 40 years. The federal government has proposed some radical changes to the way small firms can pay family members in the business, save for the future and transfer the business to the next generation. All three will significantly increase taxes on small business owner, including those with very modest incomes. In my 23 years of advocacy for small business, I’ve never seen business owners become so spontaneously angry at a government as I have since these proposals were announced.

MP: What role does CFIB play to help small businesses grow and be successful?

DK: Everything we do at CFIB is designed to help increase the odds of a business owner’s success. That happens in three important ways. One, we provide specialized business resources and help on topics ranging from HR to government compliance. Two, we leverage the strength of our 109,000 members to negotiate savings and benefits for small firms with carefully selected service providers, such as Mastercard, Scotiabank, Chase Paymentech, and Payworks. And three, we serve as Canada’s top advocate for small business concerns with governments and policy makers. Business owners — from a startup to a serial entrepreneur — are set up for success when they have a CFIB membership.

MP: Do technology and innovation give small businesses a better chance to succeed?

DK: Technology and innovation are critical for smaller businesses and can be a huge competitive edge. Technology has allowed smaller firms with fewer staff to be able to compete with some of the big guys — particularly if the business isn’t located in a big city. Innovation has always been a strong suit for smaller firms. While they are often resource starved, smaller firms don’t have the institutional bureaucracies of big businesses, so they can make changes far more quickly to respond to customer needs. But technology can also be a challenge too. I think of Amazon and other large eRetailers who are putting pressure on the retail sector in a big way.

MP: What does the future hold for small businesses in Canada?

DK: As I said earlier, governments are sure not making it easy for small business right now. I deeply hope that this is a short-term phenomenon and our political leaders will self-correct and recognize that the economic success of the middle class is directly linked to small business growth. But entrepreneurs are optimistic by nature. Despite the challenges, more young people are opting for entrepreneurship over a career as an employee. This gives me great hope for the future.