Sunshine Coast Small Business: A Looming Crisis?

[Skook]

There has been much ink expended on a looming crisis in residential real estate as baby boomers begin to contemplate downsizing or cashing out the equity in their homes. As these homes are thrown on the market, the questions raised are: a) how will this impact home prices and b) who will buy these homes.

What is not getting the same amount of attention is that thousands of small business owners throughout the province and across Canada are baby boomers, too. They are now preparing to retire and hope to pull out whatever equity they can after years of operation. This issue, as well, raises important questions: a) again, who will buy and b) if they can’t find buyers and shut the businesses down, what will be the financial impact not only on the owners, but on the communities dependent on these businesses. In cities with large populations, these issues may have little importance; however, the same cannot be said for smaller rural communities.

I have been following the commercial listings on the Sunshine Coast since last summer and this crisis has begun. I know from living on the coast that many of the businesses that have been put on the market are due to the owners wanting to retire and these listings aren’t moving. Now, this is a social issue the weekly newspaper should and could be writing about without losing advertising dollars.

There is one agency that has recognized this looming crisis - Community Futures. For those not familiar with CF and its role in rural communities, here is how it defines itself:

Quote:The Community Futures Network was established in 1985 by the Federal Government in response to the severe economic and labour market changes faced by rural Canadian communities. Each Community Futures office delivers a variety of services ranging from strategic economic planning, technical and advisory services to businesses, loans to small and medium- sized businesses, self-employment assistance programs, and services targeted to youth and entrepreneurs with disabilities. The Community Futures Network in British Columbia is comprised of 34 locally and strategically positioned organizations who share a common vision to create diverse, sustainable communities by supporting local, community based economic development. Since its creation, the network has had significant impact on the socio-economic development and diversification of the rural communities it serves.

CF’s response to this looming baby boomer crisis was to launch a project called ‘Venture Connect’ and that project has now been turned into corporate subsidiary of CF:

Quote:Venture Connect began as a project created in response to the challenge that over the next 20 years, there will be unparalleled shortfalls of both business owners and employees resulting in potential closure of large numbers of small businesses throughout the province. The project was supported by BC Ministry of Jobs, Tourism and Innovation, BC’s Small Business Roundtable, Island Coastal Economic Trust and six Community Futures organizations throughout Vancouver Island and the Island Coastal region (this includes Powell River and the Sunshine Coast). Now, Venture Connect is a corporation; a subsidiary of 6 Community Futures offices and is governed by a 12 member Board of Directors.

In 2013 Venture Connect established partnerships with a number of Community Futures and expanded its service delivery to the Southern Interior and Northern Regions of BC. It is anticipated that the service delivery will cover the province in 2014.

Two Venture Connect website blog posts from 2012 are worth quoting here for the statistics offered and the issues raised.

Quote:Projections for Rural Community Growth
Evelyn Clark
October 23, 2012

According to BC Stats, projected population growth for British Columbia between 2011 and 2036 is about 1.2%, significantly lower than the 1.7% experienced form 1985 to today. As well, it is indicated that strongest growth will take place in the Lower Mainland with rural growth, with the exception of the booming Northwest, will continue to age and population growth will slow.

What does this mean for rural communities given that a larger senior population has ramifications for small businesses, tax bases and community focus?

Currently people considered seniors in our world have perks that younger people do not. In British Columbia, seniors sail free on BC Ferries during the mid-week [Note: these free sailings will be eliminated tomorrow, April 1, 2014], they frequently have no-fee bank accounts, senior’s menus at many restaurants and small business discounts from 10 – 25%. In BC senior citizens currently receive a 49.8% grant on the property taxes. In 2036, almost a quarter of the residents of BC will be aged 65 and older. Can we then afford to given ¼ of our population the discounts offered to seniors in 2012?

Currently models for rural communities can be called a “growth” model. “Total growth in a community consists of the net employment and resident population effects of primary industry growth, service industry expansion, primary or indirect commercial development and primary or indirect residential development.” But what happens when our rural population flat line and our elderly population increases? Retirees have a different economic focus. Rather than growth, retirees often have an interest in maintenance. More retirees are mortgage-free, require less consumer goods than growing families and use service industries more often. As well, retirees require more medical services as they age.

All of these trends suggest that in aging rural communities it may not be business as usual. As our small business owners retire out of their businesses, communities and their leaders may have to look toward community inefficiencies and concentration of services rather than development of big box stores and far-flung malls.

Now is the time to prepare for the demographic shift in BC rural communities and take a pro-active stance in our community development plans. Communities will age, the population landscape will change. How we respond to those changes now will assist in creating vibrant communities for the next 20 years.

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Rural Community Growth – Where Is It Coming From?
Lori Camire
September 13, 2012

Behind the Mainland, Vancouver Island ranks second in small business distribution by region at 18.1% of the businesses being small businesses, with small business employment impacting some 1,038,300 people in 2011. Vancouver Island and the Sunshine Coast are home to over 15,500 of those businesses impacting some 54,000 employees.

Combine those statistics with the projections that our population in Canada will flat line and British Columbia is slated to have a projected “elderly dependency ratio” of 44.6% - third highest behind Atlantic Canada and Quebec and one has to ask the question, “Well who will replace our population?” and “Where will our entrepreneurs come from?”

BC Stats has recently completed a study entitled BC and Regional Population Projections, 2011 to 2036 where they state that “The major factor driving population growth over this period will be migration to BC. International migration will account for 77.4% of the population gain, followed by interprovincial migration at 17.3% and natural increase (births minus deaths) at about 5.3%.”

According to the 2011 Census, British Columbia had some 1,170,000 immigrants with some 55% arriving from Asia, 31% from Europe and 10% from North and South America combined. Given that the first place most immigrants will land is urban centres, it may take some time for them to travel to rural communities. But inevitably they will leave urban centres for the promise of economic prosperity.

Immigrants have proven productive and innovative for Canada as confirmed by the recent Conference Board of Canada study that stated, productivity and innovation are critical for economic development. At every level of analysis, immigrants are shown to have an impact on innovation performance that is benefiting Canada.”

It is time to take a proactive attitude when it comes to shaping our economic future. David Turpin, and vice-chancellor of the University of Victoria states it best, “It speaks to the importance of reaching out to the world and indicating that BC is a place for the best and the brightest to come. Like modern economies everywhere, BC is counting on innovation and technology to raise productivity and help shape a bright and prosperous future.”

There has been quite a heated debate over immigration this past weekend on our sister site ‘Vancouver Condo Info’ and I have no intention jumping into the fray. What I will say, though, is that likely 99% of those offering their “opinions” live in the lower mainland and have no true appreciation of the looming crisis facing rural communities. New immigrants may be the only solution to saving rural economies and services.

Let’s return to Venture Connect. The purpose of its website in general is to match sellers of rural businesses with potential buyers. As of today, here what the website shows for businesses up for sale. On the left is BC as a whole and on the right the Sunshine Coast and eastern Vancouver Island. Note: these are only businesses that have posted to Venture Connect.

In the image below are actual SC and Powell River businesses currently for sale and posted to VC. The details have been uploaded by the owners or their Realtors; however, they represent a fraction of the businesses currently listed in both areas. (I see a Squamish biz snuck into the SC list - must be looking for an SC buyer - good luck.) In future posts, I will take a more in depth look at some of the Sunshine Coast business listings.

The following is a 2012 Community Futures video worth a watch. This is the description accompanying the video:

Quote:Since 1946, the baby boomer generation has been the single most power force influencing and changing culture, politics and the economy. The demographic shift that is taking place as baby boomers move into their senior years has far reaching effects. Boomers have powered growth over the past sixty years, but as they retire this group will begin pulling money out of the system rather than pumping it in, and where they put that money will be changing. There will be challenges and opportunities for all of us, our communities and our businesses.

I am going to conclude with a picture of three of the seven Sunshine Coast Volunteer Departments from a 2011 Coast Reporter special report. I don’t think I need to comment further except to say these photos highlight the demographic shift facing the SC and all rural BC communities.