Small Business Optimism in B.C. Slips
Prince George, B.C.- British Columbia is now third when it comes to optimism among small business in the country.
According to the latest monthly Business Barometer survey results from the Canadian Federation of Independent Business (CFIB), BC’s small business optimism decreased 2.3 points in September to 63.3.
That was enough to drop B.C. in the provincial rankings to third, behind Quebec (67.1) and Prince Edward Island (63.9)
While BC is still in the top three, confidence is now back to where it was at the start of the year and significantly below the levels seen in 2014 and the first half of 2015, when the index hovered around 70.
Measured on a scale between 0 and 100, an index level above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. An index level of between 65 and 75 means the economy is growing at its potential.
“British Columbia has seen a few months of softening business optimism,” said Aaron Aerts, BC economist. “It is now just outside the range of healthy economic growth. That being said, it remains at a reasonably high level and is the third highest in the country.”
According to the CFIB small business in BC still intend to ramp up hiring, but intentions were down in September. In September, 22 per cent plan to increase full-time staff in the next three months, down four points from August. In comparison, 14 per cent are looking to cut back, up three points from August.
Forty-three per cent of entrepreneurs in September believe the general state of health of their business is good, down four points since August. That compares to just 9 per cent of BC small businesses who describe their business’ health as poor, unchanged from last month.
Tax and regulatory costs are the main cost constraint on businesses as indicated by over half of respondents. Wage costs continue to become a more significant constraint, with almost half of entrepreneurs citing them as difficult to manage.
And with an election coming up we get even more nervous.
What’s wrong with oil ,gas , pipelines , mines getting all the attention , tax breaks and free electricity . What has small business ever done for the liberal government . Moral and ideological support walks , big money talks .
Whether the business is big or small, Ataloss, as the article says, “Tax and regulatory costs are the main cost constraint on businesses as indicated by over half of respondents. Wage costs continue to become a more significant constraint, with almost half of entrepreneurs citing them as difficult to manage.”
The difference is that big business can more easily comply with those “regulatory costs”. And afterwards they still do have some earnings on which they can pay taxes. Small businesses, not so much so.
The main reason why small businesses are having problems with regulatory costs is because they are not as familiar with them as big business is. Most of the small business I have had some experience with know little about regulations, make lots of assumptions, complain a lot if things are not as they intuitively thought they were and almost immediately jump to the conclusion that “the place is not open for business”, when the truth of the matter is much more that they are not prepared to do business.
I partially agree with you, gopg2015. Often times though, small businesses are not ever made aware of changes in regulations until long after they’ve happened, and then only when there’s some unexpected occurrence.
For instance, the legislation changing the old Electrical Inspection Branch of the BC government into the BC Safety Authority was passed in the early 2000’s. It was nearly a decade later that I was even made aware there was such a thing as the BC Safety Authority, and that we now were required to fork over an annual stipend for something called an “Operating Permit”. And that would never even have happened if the two Interior sawmills hadn’t blown up, since we had never required any additions or changes to our electrical service since it was installed, and inspected, years ago, and the old procedure of our electrical contractor pulling a permit for some specific change or addition has been supplanted.
No one ever wrote and informed us this change was being made. In fact, twice now, when I’ve renewed our annual Operating Permit, they don’t even bother sending out the Permit! They’re not so lax when it comes to cashing the cheque, though.
Noone is getting “free” electricity, nice try though. They can defer their bill and pay horrendous interest.
Now public charging stations for EVs, those are free electricity. Hosted charging stations do not even recover their costs but hope to get the customers as they plug in
I think that small business is being overly optimistic because there is very little to be optimistic about in BC to-day.
LNG is a bust. Site C may very well be built, however there is not a market for the electricity it will produce, so in effect this project will cost us millions (billions) with no guarantee of ever making a dollar on it.
Even if we were to ok an oil pipeline to the West Coast, or Vancouver, or Eastern Canada, or the Americans ok Keystone, there is no guarantee that we will be producing anymore oil with the price below $55.00 a barrel.
So where are the jobs for the next 10 years going to come from??
Alberta oil was the backbone of the Canadian economy and it is now in the tank with some 50,000 people unemployed and more coming.
China is buying less, Russia is increasing sales of lumber to China, we do not have a softwood lumber agreement in place with the Americans, and therefore could be facing a 30% duty on exports by the end of October.
US housing market is starting to slip, and the Canadian housing market is over priced.
One bright spot is the fact that the coal mines around Tumbler Ridge that were owned by bankrupt Walter Energy have been bought up by foreign interests, and there is a possibility of one mine opening up sometime next year.
If you had 100% full employment you still could not fully liquidate the overall costs of production from the prices that would have to be charged for it, even if businesses DIDN’T allow for ANY profit and offered their goods at cost. They couldn’t do that, of course, but even if they could, full employment still wouldn’t distribute enough incomes, in total, to cover all the costs, in total, in any same fiscal period.
And if that’s true in any one fiscal period, how then can the deficiency be made up in the next one? It can’t be. There has to be a continual infusion of ‘new credit’ into the economy to make up the deficiency.
If it’s by the way of bank loans, those loans, in their totality, will never be capable of being fully repaid. If it’s by way of export credits, or foreigners buying up Canadian assets, like Vancouver real estate, we’re kidding ourselves if we believe we can ever get ‘richer’ as a country this way.
In the instance of exports, if you’re continually selling more real wealth abroad than you’re buying back in alternate real wealth from abroad, your country is getting physically poorer, not richer. And if it’s real estate we’re peddling, at overly inflated prices, how does that ever benefit those here that want to buy a piece of property here at a price they can still afford?
You always rant repeatedly on this like a stuck record. What is your solution? And put it in plain English so we lesser beings can actually understand what you are trying to say. Right now the vibe I get from you is that business should be off the chain and regulatory free, while workers should be satisfied with whatever chicken feed is thrown their way.
Hahaha, to put it as shortly as I can put it, CONSUMERS ~ and all of us are consumers~ have to be provided with an additional source of incomes over and above what some, and an ever declining number of us, are able to earn in wages and salaries.
To explain it further than that would take too much time for this venue.
“…….. offered their goods at cost”
I think you are talking about “ma and pa” small businesses who take home whatever “profit” they make at the end of the year.
Those businesses that can calculate their overhead relatively accurately, pay each employee and working owner a salary, calculate the cost of inventory as well as the cost of money they have to borrow, especially the cost of money they borrow from their own assets, and add a contingency based on the risk of making some wrong judgments about the estimated total cost of doing business as well as the business climate for the year, then a well run business should not have to have a profit.
Of course, if the estimated cost of operating the business means that the money which has to be charged for selling the products/services is a non-competitive price and customers will not flock to the door due to the great quality of the service and products, then the business is not viable form the start without making adjustments to salaries, quality of products, etc.
A well run business that takes care of overhead and other costs, including replacing machinery and refurbishing sales rooms, vehicles, etc. and can sell the volumes of service and products it is intended to sell, does not need any profits, especially if a sum of money is accounted for which is laid away in high quality investments as a “rainy day” fund for those down cycles which occur.
I think you need to study how accounting actually works, gopg2015. Profit is necessary if bank loans are to be repaid. And the starting point of all economic activity in our modern day economy is the bank loan. The system is creditary. Deposits do not create loans, loans create deposits.
When a bank makes a loan it is not taking the funds from anyone’s account. It is creating entirely new credit. Same as when a bank buys securities, and, in fact, when it spends for any purpose whatsoever. To open a new branch, or pay the staff their salaries, or whatever. There is ‘bank as bank’, which has the unique ability to CREATE money, and there is ‘bank as business’, which has to EARN money under the same rules and conventions of cost accountancy that govern every other type of business.
I’m not specifically talking about ‘mom and pop’ businesses. What applies there also applies in all businesses. They’re all required to do their books the same way.
“Profit is necessary if bank loans are to be repaid”
If you can read for content, and do it very carefully socredible, then please read my post again you will find the words “…..calculate the cost of inventory as well as the cost of money they have to borrow, especially the cost of money they borrow from their own assets” …. you will see I have that covered.
I am talking about “ma and pa” businesses, and you seem to only understand that kind of business since any reasonably knowledgeable business people include the cost of money in their “cost of business operations” calculation.
You seem to be hung up on the credit stuff, and it is blinding you from understanding the content what some others write.
Furthermore, if you have a business which has more than just the family members as “shareholders”, one would have to include the expectation of those shareholders as far as annual dividends go which they require in order to pay of THEIR loans from THEIR assets or the financial institutions at a minimum, otherwise they will soon want to cash in their shares if the business does not produce.
Lets take what you wrote from the top, gopg2015.
“I think you are talking about “ma and pa” small businesses who take home whatever “profit” they make at the end of the year.”
First of all, I wasn’t talking about ‘ma and pa’ businesses.
“Ma and pa” small businesses will still be required to file income tax returns, and whether they do their books themselves or have a professional accountant do them, the government mandates a certain conformity in how those books will be done. For them, they won’t get to take home whatever “profit” they’ve made at the end of the year, because in business accounting ‘profit’ is not analogous to a surplus of revenue over expenditure in cash. It includes a number of other items.
Let us not take it from the top. That is not the salient part of the discussion.
The salient part is the part about accounting for all the anticipated costs of operating a business, especially the part about including the cost of money in ones calculation/accounting of ALL actual and expected business costs.
That part applies to ma and pa operators who are simply operating as an unregistered “dba” or a small limited liability company with one or more family shareholders.
Whether one takes out any profit at the end of the fiscal year, or takes it out as an advance during the year as draws, or leaves it in the dba accounting entity or the limited company business entity as an asset to build up equity to be drawn on for emergencies within the business entity, it really does not matter. It is still a profit which was made over the fiscal period and has to be assigned to something.
Of course, if taken out by the owners, it is then taxable in their hands, while taxes can be deferred for specified terms if it remains in the limited company.
Then again, if we have losses, such as Trump seems to have had a decade or two ago, one would not have to pay taxes on future profits for some time. LOL
Alberta oil was the backbone of the Canadian economy? BS . The fossils don’t even make three percent of the economy . The profits , tax breaks and subsidies all but a very little stays in canada . That’s some back bone in your fantasies . Real estate Is the back bone of canada . It’s the big cash cow that just filled BCs pocket that Christy is passing around to buy votes . Keep your eye on the money . That’s what tells the real story . Big fossil is as big a lying scum bag as is big tobacco .
Real estate is ONLY what you say it is in the sense that ‘foreign buyers’ are changing their currency into Canadian dollars to buy it up. And we’ve seen some of the results of that in Vancouver. The simple, unescapable FACT is that we currently do not have a financial set-up that allows for ALL the ‘costs’ incurred in producing anything to be FULLY recoverable in ‘prices’ when current earned ‘incomes’ are only a PART, and overall a declining part, of those ‘costs’. We can bridge this widening gap by increasing debt, which we do, but cannot do without limit; or by selling our products, or other assets, like real estate, abroad.
And further to that, it is utterly ridiculous to have to import some other countries’ ‘money’ for us to be able to live. If all our borders were suddenly closed, and we couldn’t sell anything abroad, including our real estate, would we just fold up and die? Or would the utter inanity of this whole ongoing ‘financial’ situation be laid bare, for all to see?
It appears you do not understand that when we talk about the impact of “real estate” on the Canadian economy we are not talking about the physical real estate assets, we are talking about the service industry associated with those assets. We are talking about the services of selling, managing, renting and leasing of those “real” assets.
As such, in 2015, using “chained 2007 C$” some of the contributions of industry, in the order of highest to lowest as a percentage of GDP were approximately:
Real estate = 13%
Manufacturing = 10.5%
Mining, quarrying and oil and gas extraction = 8%
Construction = 7%
Finance & insurance = 7%
Health care and social assistance = 7%
Public administration = 6.5%
Wholesale trade = 6%
Retail trade = 5.5%
Professional, scientific and technical services = 5.5%
Educational services = 5.5%
Transportation and warehousing = 4.5%
Info and cultural industries = 3%
Waste management % remediation = 2.5%
Utilities = 2%
Accommodation & food services = 2%
Other services = 2%
Agriculture, forestry, fishing & hunting = 1.75%
Arts, entertainment and recreation = 1%
Management of companies and enterprises = 1%
For latest monthly figures see: statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/gdps04a-eng.htm
The flow of money into Canada as well as the flow out of Canada by investors (in such assets as real estate) and tourists is not measured by the GDP.
Ataloss. You haven’t got a clue.
Alberta has been paying huge sums of money to the Feds in Ottawa for years. According to Gary Lamphier’s article in the Edmonton Journal, in Feb 19/16.
From 2000 to 2014, on a net basis, Alberta’s individual and corporate taxpayers shipped an estimated $200 Billion-plus to the federal government. In 2007 and 2008 Alberta tax payers shipped more than $20 Billion annually. In 2011 it reached $19 Billion.
We know that it was Alberta oil money that got us through the recession through the last recession.
Some people believe that if it wasn’t for Alberta’s energy wealth, Canada would have been in deep trouble years ago. Now that Alberta does not have this revenue to send to Ottawa, we are heading for some hard times.
We will rue the day that we sat back and made things difficult for the one Province that was holding our heads above water. As Alberta goes, so goes the Country.
Bs pal . Low interest rates , no money down 40 , 35, 30 year ams , liar loans are what got us through the Great Recession . You really need to look at the money . Try and compare the two sectors . The worker that built and lived on the rewards of the great Canadian credit binge spent a tiny amount getting to and from work . Some how we’ve got to get more Canadian brains off oil . It messes not only with your brain but it seems to short out your calculators . You guys will come too once interest rates normalize .
“Alberta has been paying huge sums of money to the Feds in Ottawa for years”
Measured in a decade or two. That is not the case from the onset of confederation and the inclusion of Alberta in that Confederation, and it likely will not continue for a long period when one looks at the probable life of Confederation into the future.
These are figures for 2009 shown in order of the most paid to Ottawa to the least.
When giving consideration to equalization payments made in that year, the net contribution by province to the feds looks this way
However, one cannot just look at the tax contributions to the Feds and the equalization payments made. The concept of equalization is that for basic services, especially health services, Canadians, no matter where they live, should receive as close as possible similar quality of services at similar cost to the individual.
When one looks at that, we can readily see that Albertans get far better services at a far lower cost than most other Canadians.
A 2014 article states that “Changes to the way federal transfers to provinces are calculated since the Harper government took power appear to have made Ontario a big loser under equalization programs and Alberta the big winner, says Canada’s budget watchdog.”
“total payments this year will see Ontario obtain $19.2 billion from Ottawa for everything from equalization to health and social transfers, but that is 3.2 per cent less than the $19.8 billion it received last year.”
“Meanwhile, Alberta — Canada’s richest province — will see its total rise to $5.2 billion this year from $4.1 billion in 2013-14, a 26.8 per cent increase mostly due to Ottawa moving to a per-capita funding under the Canada Health Transfer program”
Source = thestar.com/news/canada/2014/06/19/ontario_big_loser_in_equalization_payments_budget_watchdog_says.html
Then we have the 2014 article titled: Why Richest Alberta Wins Most from Federal Transfer Payments
“wealthier provinces have historically argued that they, too, should be entitled to payments and development agencies. Partly as a result of such pressure, according to Canada’s Parliamentary Budget Officer, Alberta, the country’s richest province, now benefits most from federal transfer payments.”
It goes on to give some examples such as:
“…a person with an average income and a medical condition with a $20,000/year drug bill. That person would pay
• “nothing” in “Nunavut or the Northwest Territories;
• about $800 in Alberta;
• $1,500 in Quebec;
• about $3,000 in Ontario, Manitoba and British Columbia;
• more than $8,000 in Saskatchewan and Newfoundland;
• $11,000 in Nova Scotia; and
• the full $20,000 in Prince Edward Island and New Brunswick.”
“Starr goes on to detail astonishing disparities in spending per capita, services offered, and service costs, for people with Autism or Diabetes, or people who need knee and hip replacement surgeries. In most cases, Albertans come out on top, and the Atlantic Provinces fall significantly short”
Source = thetyee.ca/Opinion/2014/09/13/Alberta-Federal-Transfer-Payments
The question is not how much one pays to Ottawa, but how much one receives in services in the province one lives in, whether that is health, education, infrastructure such as highways, public buildings, etc.
Alberta, without a doubt, is better off than any other province in Canada on many counts.
And yes, it is obviously because they are providing themselves with petro dollars and graciously giving up some of those to the rest of Canada. Some will argue, not as much as they should be.
The intent of “equalization” does not seem to be working when one looks a little bit deeper.
Paleese cred . The foriegn buyer is only driving a tiny percentage of our market . The credit binge has been what’s propping the economy . Hell ! We’re number one in the G20 for indebtedness . If you think a few money laundering foreigners could affect the trillions of dollars sloshing around between banks and consumers of real estate in canada , you’re dreaming in technocolour .
It isn’t the local buyers that are bidding up real estate prices in major urban markets to ridiculous heights, Ataloss.
Yes, there IS an ongoing credit binge. And if there weren’t? Your economy would’ve tanked into a depression that would make the one in the 1930’s look like a Sunday school picnic. It IS definitely a problem ~ THE ‘problem’, in fact. For the only way it can be kept going is through continual inflation. And inflation, all down through history, has ended up destroying every civilisation it has ever taken root in and been allowed to grow.
Yes it is cred . It’s us Canadians that are driving our own market for real estate . Stop being such an underachiever . We can easily be much more finacially screwed up than everyone else . We already are . We’ve beaten the Americans on the debt to income ratio at the beginning of their end .
“It isn’t the local buyers that are bidding up real estate prices in major urban markets to ridiculous heights”
What is bidding up prices is the old adage “location, location, location”
Please explain why prices went up in Calgary and to a smaller degree in Edmonton over the last couple of decades. It was not foreign buyers. It was primarily local buyers due to the economic activities in Alberta.
The same goes for Toronto and to a smaller degree in Vancouver.
If PG had been growing since 1981 rather than beginning to stagnate, prices here would be 20%+ higher than they are now as well. And that would not be due to foreign buyers.
We are sitting on the edge of a precipice and it wont take much to push us over.
The various Governments are a huge vacuum machine sucking up all the available dollars, and paying them out to people who have pretend jobs, and pretend to work.
We do not have anyone in the Country with any vision, nor do we have anyone that can get us out of this mess. We have sat on our collective asses and allowed the Governments and big business to basically ruin this Country.
When your choices are Christy Clark or the NDP in BC. Trudeau and some no name Conservative or NDP on the Federal scene, and Trump or Clinton on the US scene, you know the end is near.
You’re right. Government jobs now account for more employment than do private sector jobs. And there seems no end in sight. We tell youngsters they need to be educated beyond high school to ever amount to anything. Some of them go to university and become at the end of their studies some kind of “-ist”. Biologist, hydrologist, archaeologist, economist, ecologist, etc. No one tells them whether or not there’s any prospects of employment for whatever type of “-ist” they’ve become. But they can’t be told at the end of their studies, not ALL of them anyways, that they have to take some employment that’s beneath the stature they’ve studied for. So governments create jobs for them. Which, in itself, might not be an entirely bad thing. Only what governments often set them to do ends up being an enormously costly detriment to those who just might create some employment that’s still actually useful. It’s got to the point now, I think, that anyone wanting to try and still do that latter needs their own type of “-ist” ~ a psychiatrist.
Step up . You pays yer money and you takes yer chances cred . That’s what we bin doin since we fell out of the trees . We had to step up . Nothin changes .
“Government jobs now account for more employment than do private sector jobs.”
That is BS. Look at the contribution to the economy by “government”. I have broken out the obvious from the above for an approximation.
Health care and social assistance = 7%
Public administration = 6.5%
Educational services = 5.5%
Waste management % remediation = 2.5%
Utilities = 2%
Arts, entertainment and recreation = 1%
That adds up to around 25%
Do you want to privatize Health Care such as in the USA and bump up health care costs even more?
How about education?
That was not a bad guesstimate on my part.
Here are some actual figures regarding the number of public sector employees in Canada from June 2015 “An Analysis of Public and Private Sector Employment Trends in Canada 1990 – 2013”
“Subsequently, an increase began (of public sector employees), with a peak of 24.4 percent reached in 2010 and then a slight decline to 24.1 percent by 2013.”
source = fraserinstitute.org/sites/default/files/analysis-of-public-and-private-sector-employment-trends-in-canada.pdf
It would not hurt for you to back up your assertions a bit socredible. You might find that your credibility might increase.
Then again, we are in the era of Trumpism … shoot from the hip … who cares about facts, eh? There might actually be some gullible people out there. :-)
“Small Business Optimism in B.C. Slips”
As someone who owns my own business, and as someone who was raised by parents who owned and operated their own small business for decades, I’m a bit curious as to how many here offering their opinions regarding “Small Business Optimism” have ever owned and operated a small business?
Seems everyone has an expert “opinion”, even if they have little if any experience in what they claim to be an expert in!
Well, I’ve been operating a small business for going on 48 years now, and my dad was also a partner in another small business for 41 years. I know Palopu has operated a small business, because he’s mentioned that previously. Of anyone else, I couldn’t say, but I have my doubts.
As do I socred, as do I! ;-)
So only people with direct experience in a particular subject are deemed qualified to speak about it?
I’ll remember that, and discount opinions accordingly, the next time discussions arise on policing, our legal system, government operations, environmental science, global affairs, civic planning and on and on and on . . .
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