May 12, 2010

The loss of a core industry can have a devastating impact, and entrepreneurship can be the answer

Cathryn Atkinson, Squamish, B.C.

Globe and Mail

[Published on Tuesday, May. 11, 2010 8:55AM EDT]

Jeff Dawson has watched his B.C. town suffer through a decade of downturn in the forestry sector, and he says the best way to revitalize its future is through entrepreneurship.

Mr. Dawson is the Director of Community Futures Howe Sound (CFHS), a non-profit economic development organization dedicated to building small businesses.  CFHS is one of 269 Community Futures (CFs) dotted around Canada, with 34 in British Columbia.

Squamish, a former mill town of 16,000 set in a picturesque valley 55 kilometres north of Vancouver, is in a good position to benefit from CFs, having been transformed by the loss its core industry and moving toward tourism and creative enterprises, Mr. Dawson says.  It is the largest community served by CFHS, which also covers the resort of Whistler, and smaller communities from West Vancouver to Mount Currie, a total of about 30,000 residents.  “I’ve been here 14 years and there was virtually a non-existent entrepreneurial mindset in Squamish when I started,” Mr. Dawson says.  “You didn’t have to create your own job because you had the mill.  There were so many options.  Squamish was the largest community by far in our region, but it was a company town.”  CFs were established nationally in 1985 by Employment and Immigration Canada, now Human Resources Skills Development (HRSD).  It was seen by the Mulroney government as a way to provide alternative business loan assistance in rural areas experiencing significant downturns due to loss of industry.

When CF loans are paid back with interest, the money increases the overall capital of the local organization, providing more money to loan to future businesses.  Each CF operation has the autonomy to operate according to what best suits the local community.

“All CFs are different. It’s not a cookie-cutter organization, that’s one of the neat things about it … What works in Squamish and Whistler may be the last thing people in Swift Current need,” Mr. Dawson explains.

In 1994, HRSD entered into negotiations to transfer the program to regional economic development agencies across Canada.  This regionalization has led to a diversity of CF Programs, each shaped according to the needs of the locale.  CFs are all non-governmental organizations, with British Columbian CF Programs attached to the Western Economic Diversification federal agency.

Fifty per cent of what CFHS does is provide small business loans, 30 per cent involves running a self-employment program for new entrepreneurs, most of whom have recently been on Employment Insurance, and the remaining 20 per cent goes toward community economic development one-offs such as workshops or education projects.

Around 1,800 people, roughly 5 per cent of the region’s population, use CFs in one way or another over the course of a year in the Howe Sound region, with 109 new businesses started in the past fiscal year.

“Those numbers are huge when you think that we only deal with small businesses,” Mr. Dawson says.

According to a May, 2009 impact study by the Conference Board of Canada, for every $1 spent by CFs on loans, $4.20 is earned in Canada.

George Vass, the General Manager of Community Futures Prince Albert (CFPA) in Saskatchewan, says the scope of its work is tied closely with local enterprise schemes and concentrates on business loans and workshops.  “We’ll see applications come in from banks about a business they feel is too risky for them, or from training centres where people have made their business plans and now want to start working on their business,” he says.

“We are prudent with our lending, but we do a lot of ‘character lending.’  Whereas banks don’t waiver from security lending and they want the loan to be secure, we will look at the person more, the idea more.”

He said most loans run in the $50,000 range up to a maximum of $150,000.  He said delinquency is almost nil, just $4,000 written off since 2005 out of a total capital base of $2.6 million.  Mr. Vass said CFPA has now started branching out into micro-financing, with small loans of several thousand dollars being handed out. The results so far have been encouraging, he says.

Diana Jedig, the Executive Director of the Ontario Association of Community Futures, says there was no single overseeing body for the program in Canada.  Instead, a national network was managed by regional associations located in each province or territory.

“It’s very much rooted in the community, as a program.  [The regions] meet twice a year to share issues, and every three years there is a major national event.  At the last one, in Ontario last year, 700 people took part,” she says.

Ms. Jedig says any person with a solid business idea and a willingness to push themselves would be taken seriously if they applied for funding or to take part in CF Programs.

“In rural communities we are often the only place for these people to come to with their plans,” she says.  “We see all the time entrepreneurs with great ideas.  They may not have the experience in business, but we try to help them fill in any gaps.”

[Special to The Globe and Mail]