Economic growth, ICT adoption slow in regions of Quebec

Earlier this month Canada’s new government unveiled two measures that will make more than $50 million in funding available for business start-ups and business succession in Quebec regions experiencing slow economic growth. "Anything that will help entrepreneurs start up their business, like supplying the proper financing for such, is a good initiative," says Richard Fahey, the Canadian Federation of Independent Business’s VP for the Quebec region. " realizes the threat to the Quebec economy and they are being proactive to attack it in a proper way because we know the main challenge is financing." The issue of business succession is particularly important to the Quebec economy because more than 40% of Quebec’s small- and medium-sized enterprises (SME) plan to exit their businesses within five years and 70% plan to retire within 10 years. "They’re basically stepping up to the challenge of the succession issue," Fahey tells Network Letter. The Capital Fund for Business Succession and the Venture Capital Fund for Business Start-ups in the Region should help lessen the impact on the Quebec economy caused by its demographic situation. The two funds were created by Canada Economic Development in partnership with Quebec’s Community Futures Development Corporations and Business Development Centres, the Fondation de l’entrepreneurship, and with the support of Desjardins Venture Capital. The influx of capital into the province is intended to support entrepreneurs, but should have sweeping benefits for the whole province. "What we’ve been seeing with major industrial plant closures is that if you have a dynamic entrepreneurial culture in one region, that region will get through the slowdown in the economy," says Fahey. "Whereas in regions that have been mainly mono-industrial, whenever there’s a plant closure it’s almost as if you were closing down the town all together." In terms of business succession, Fahey says without a proper plan entrepreneurs who are selling their business often end up taking the first offer they receive, which can come from a competitor outside of Canada that’s merely looking to eliminate the competition. In fact, the CFIB estimates that if this scenario happened with all of the entrepreneurs in Canada who are planning on retirement it would put approximately two million jobs at risk across the country. Succession planning reduces this risk. "If you do proper planning, identify chief successors, train them, and find the proper financing for that succession, you have a greater chance of improving not only the business through increased sales or increased market share, but that will also generate more employment in your region," says Fahey. "So it is worth investing in succession planning by entrepreneurs and to that extent by the government to support them in doing so." Exacerbating the problem of Quebec’s aging entrepreneurs is the fact that a lesser percentage of the population is inclined to start up a business than any other province in the country. The Venture Capital Fund for Business Start-ups will provide funding to entrepreneurs looking to start an SME in one of seven Quebec regions: Abitibi-Témiscamingue, Bas-Saint-Laurent, Côte-Nord, Gaspésie-Iles-de-la-Madeleine, Maurice, Nord-du-Québec and Saguenay-Lac-St-Jean. The goal is to reverse a trend that is seeing young people leave these regions to enhance their future prospects. Interestingly, and perhaps not coincidentally, Fahey says CFIB surveys show that the adoption rate of Internet and ecommerce in Quebec is slower than anywhere else in Canada. Indeed, a report from the Canadian Association of Broadcasters states that while the penetration of high-speed Internet has reached 60% amongst anglophones, it is at only 40% for the francophone population. But the problem isn’t restricted to adoption, according to Fahey. "What we see is that Quebec is lagging behind in terms of connectivity and using information technologies," he says. "That being said, once our entrepreneurs take on the challenge of information technology, once they’ve touched it, they can’t let go, and 90% of them tell us that it’s the best thing since sliced bread." The adoption problem stems from a perception among CFIB members in Quebec, who are not fully convinced that transactions on the Web are actually secure.Although the two newly established funds will provide the capital to allow young entrepreneurs to either start their own business or successfully take over an existing business, they are in no way tailored to information and communications technologies (ICT) investment. Any capital used for ICT will happen strictly at the discretion of the entrepreneur. In the press release announcing the two new initiatives, Jean-Pierre Blackburn, Minister of Labour and Minister of Canada Economic Development for the Regions of Quebec said: "We need to support the development of new enterprises and make special efforts, using flexible measures, to keep young people in the regions." Updating these enterprises by revamping dated ICT systems seems like one logical way to foster enthusiasm in a new business culture and improve efficiency to ensure future growth and success. However, Fahey says that "the research demonstrates that the main challenge for succession planning is having access to proper financing entrepreneurs." So once the money is in place it is up to the new business owner to decide their own ICT path. With that in mind, along with the knowledge that getting past the adoption of new technologies is the hardest step, the onus perhaps falls on communications companies to target these new business owners. The approximately 70% of Quebec SMEs expecting a potential ownership change in the next 10 years could represent a brand new, and sizeable, market of business customers for the future.

Economic growth, ICT adoption slow in regions of Quebec

News | September 15, 2006

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