… Communities in Boom: Canada’s Top Entrepreneurial Cities

October 2009

Queenie Wong, Research Analyst
The 2009 rankings reveal that the majority of urban fringes outscore city cores. Select cities in Saskatchewan and Quebec show better than average performance in providing a good environment for small business development. Generally, areas outside of the city centre promote greater business growth through stronger entrepreneurial culture and sounder public policy for businesses.
The CFIB entrepreneurial city rankings are unique to other existing economic rankings.  Besides measuring core statistics such as business start-ups and self-employment, these rankings also incorporate direct measures of business climate—namely the actual perspectives of a community’s business owners. Measuring the current state of businesses provides insight on how well they are able to generate business within the community. Meanwhile, assessing future business outlook can help determine the viability of the businesses in an area and gauge how the local economy is performing as a whole. Using business owner views on local governance also helps rate the effectiveness of public policy on businesses.

There is no question that small and medium enterprises (SMEs) are Canada’s engine of growth. After all, SMEs employ about 55% of all working individuals in the country. Businesses, whether they are located in urban or rural areas, play an integral part in the economic and social well-being of communities. In this study, Canadians can gain a better understanding of the triumphs and hardships of small business ventures within a city scope.

What makes an entrepreneurial city:
It may seem obvious, but the surest signs of an entrepreneurial hot spot are the presence of a high concentration of entrepreneurs and a high business start-up rate. It is also important that business owners have high levels of optimism and success in their operations. Good public policy is also critical, so we look at the presence of supportive local government tax and regulatory policies.

CFIB assembled a listing of 12 indicators. Drawing from published and custom-tabbed Statistics Canada sources, the index also contains direct perspectives from CFIB’s membership, which numbers more than 105,000 business owners across Canada. The city definitions are based on Statistics Canada’s Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs), which cover local economic regions better than simply using municipal boundaries. There are approximately 100 CMAs and CAs with populations above 25,000 in Canada. In some cases, CFIB disaggregates CMAs in Toronto, Montreal and Vancouver into core and suburban areas, while Ottawa-Gatineau is split into its Ontario and Quebec components.

The report in PDF:

The National Post article:

Best Cities for Business: Saskatchewan heats up

It’s official: Saskatchewan is the new Alberta.

According to the second annual FP/CFIB ranking of Canada’s top business-friendly cities, Saskatchewan and Quebec have the largest number of cities at the top of the list, while the post-boom cities of British Columbia and Alberta, along with those in Ontario, dropped significantly in the rankings from lower commodity prices and faltering economies.

This year’s top-ranked entrepreneurial city in Canada is Saskatoon. For Gordon Ashdown, the owner of Can-West Agencies Ltd., a wholesale distribution company in Saskatoon, the reversal of fortunes is welcomed with open arms.

“We now have an environment that’s really good to work in and it’s improving all the time,” he says.

“Just the business-friendly government has made a huge difference in Saskatchewan.”

Communities in Boom: Canada’s Top Entrepreneurial Cities, by the Canadian Federation of Independent Business, evaluates cities across the country on three key measures: Policy, which encompasses tax and regulatory policies; presence, which reflects the concentration of entrepreneurs and business startups; and perspective, which gauges the optimism and success of actual small business owners.

In Saskatoon, a combination of municipal and provincial tax policy changes that are more supportive of business startups helped more entrepreneurs get established at a time when an infusion of hundreds of millions of energy investment dollars bolstered the province’s economy.

Saskatoon is at the heart of the boom in business in Saskatchewan, a city that experienced its largest population increase since 1952 following years of residents flocking to Alberta and British Columbia.

…Saskatoon rated strong on the policy side for its relatively low property tax rate, which is 1.75 times the rate of residential property taxes. The City of Toronto, meanwhile, ranked 96th, with a business property tax rate that is still 4.5 times that of residential property.

“We place a significant amount of weight on the [tax] policy measure because it’s indicative of the way local governments address local economic development policy,” says Ted Mallett, chief economist with the CFIB in Toronto.

Quebec also ranked high on the list due to its strong entrepreneurial base. “There seems to be a lot of self-employed people in these particular regions relative to other areas, so Quebec is a business startup centre,” Mr. Mallett says.

There are also fewer bureaucratic hurdles to overcome in Quebec.

…In general, smaller cities — the report included centres with populations greater than 25,000 residents — outperformed larger cities due mainly to lower relative tax rates.

“Larger cities … really take advantage of the business sector and milk it for every cent on the property tax side,” Mr. Mallett says.

Tags: business-friendly, CFIB, Communities in Boom, Quebec, Saskatchewan, Saskatoon, taxes, Windsor