Leigh Smout is President of the World Trade Centre Toronto at the Toronto Region Board of Trade.
As the share of vaccinated Canadians continues to tick up each day, governments are painting a new picture of the year ahead – one without lockdowns, restrictions, and stay-at-home orders. Key among those most enthusiastic about this pivot: small business owners.
With cleared-out main streets and low commuter foot traffic drying up demand, Canada’s small businesses have collectively taken on more than $135 billion in debt to survive. While continued government aid and measures to partially reopen business districts will help, there’s another, an often-overlooked lifeline for businesses to grab hold of International trade.
Even as Canadians create new businesses at a higher rate per capita than Americans and rank second in the world for starting new enterprises, only 12 percent of our small businesses are exporting their goods and services. The initial pandemic shock may have disrupted supply chains, but the majority of countries now have cross-border exceptions for business and trade-related affairs. In other words, travel and tourism may still be down – but the world is ready to buy Canadians.
Trade isn’t just for the big players either. Here are three things that every micro, small or medium-sized business should know about international trade in the age of COVID-19.
First, there is no economic recovery without international trade. Canada’s domestic market is just too small and fractured to support a rapid and widespread increase in consumer demand, and interprovincial barriers for some products are even more restrictive than international barriers. Canada benefits from a strong brand and a global reputation for fairness in business and quality goods. Use those advantages to regain lost pandemic revenues.
Second, look beyond the usual trade suspects. Canada has 14 free trade agreements, covering 60 percent of the world’s GDP and a global pool of 1.5 billion consumers, yet 75 percent of our exports go to the United States despite it being a highly competitive market. It’s understandable that businesses – and especially smaller ones – might be intimidated to look beyond our immediate neighbor for new customers, but there are resources to help. A new World Trade Centre Toronto report identifies high-potential export sectors and international markets primed for entry by Canadian businesses, such as those with a fast-growing middle class, similar regulatory frameworks or that have a large diaspora here. On that last point, homeland connections matter in trade and business – and multiculturalism is a uniquely Canadian strength we can capitalize on.
And finally, get online. Almost half of the Canadian micro, small and medium-sized enterprises did not have a website in 2019, and only 8.5 percent of those that did feature online payments options. Firms that do employ online sales predominantly do so for local customers, with only one in 10 reporting customers outside of Canada or the United States. And going digital is not just about e-commerce. Better integrating technology into front, middle and back offices can connect these businesses with global customers while at the same time improving productivity, remote-work capacity, and record-keeping. Again, there are customized programs designed to help businesses transform digitally. They are here to help at no cost to the business.
Small businesses are putting these steps into action. Toronto-based Suku Vitamins, for instance, have been able to leverage virtual trade missions and other programs from the World Trade Centre Toronto and Trade Commissioner Services to launch their sugar-free, plant-based gummy vitamins products in Latin America and Asia. Their CEO, Ju Young Yoo, credits their expansion to being small but thinking global – something all small business owners should do.
Why do these support programs exist? Because trade is key to Canada’s economic future. Every $100 million increase in exports creates more than 1,000 new, typically higher-paying jobs. Graduates of the World Trade Centre Toronto’s trade-readiness programs see their revenues grow by roughly a quarter within a year of participation and double within three years.
What we need to get better at, however, is getting value from our intellectual property by selling our products and services to the world. Unless we do, any potential bump in domestic spending following the removal of COVID restrictions will be a drop in the bucket compared to our missed opportunities internationally.