Small business, big opportunity

According to the provincial government, small businesses make up about 96 per cent of all businesses in Alberta. While they may be small, they certainly are mighty. In fact, small businesses in the province contribute nearly 30 per cent of Alberta's gross domestic product (GDP) – a figure that puts them first in the country for small business GDP per capita in 2009. But it's not just small enterprises in Alberta that are economic powerlifters. Across Canada, small businesses are doing their bit by employing half of the total workforce.

The hard reality, however, is that 75 per cent of Canadian small businesses fold within nine years. Why does that happen, and what factors contribute to the long-term success of some small businesses?

These questions and others like them are being explored at the University of Lethbridge's newly established Small Business Institute (SBI) in the Faculty of Management. Founded earlier this year, the SBI links small businesses to the expertise of researchers, professionals and other business people. Simply put, the SBI serves as a hub for research on small businesses and a resource for those who own, work at and are interested in them.

SBI guys
Dr. M. Gordon Hunter and Dan Kazakoff want to help area small businesses avoid the pitfalls that doom many great ideas.

The Institute investigates many issues related to businesses, including succession, sustainability and franchising. The SBI also works with rural areas throughout southern Alberta, where small businesses are often the lifeblood of the community.

"The SBI is an excellent example of U of L professors and researchers working to ensure that their work is relevant and valued in the community, and that leading business practices can be adopted by small businesses in the region," says David Hill, director of Centres and Institutes at the U of L.

The SBI was established by researchers Dr. M. Gordon Hunter and Dan Kazakoff. Both professors in the Faculty of Management, they worked together initially to co-author the book Little Empires: Multi-Generational Small Business in Southern Alberta, Canada. Published in 2008, Little Empires profiled 11 local, family-run operations.

"We wanted to help small businesses learn from each other," says Kazakoff, noting that the SBI was a logical evolution of the work invested in Little Empires. "With the Institute, we wanted to raise the profile of small businesses and interact with the community. It was our way of giving back."

The strategy works well, says Paul McDonald (BMgt '88), one of the entrepreneurs featured in Little Empires. McDonald, along with his brothers Jim (BMgt '80) and Gord (BMgt '89), owns the McDonald Auto Group, which has operated in southern Alberta since 1942. While the family business originally sold John Deere tractors, it now owns McDonald Chevrolet Buick GMC in Taber and McDonald Nissan in Lethbridge.

Participating in Little Empires, says McDonald, was an eye-opening experience. "It allowed me to see how other businesses operate and what allowed them to prosper." Today, he repays those insights by serving on the SBI's Advisory Board. "They want to know the challenges small businesses face and the resources we need to succeed in the future. We provide that feedback."

In addition to guiding the SBI's initiatives, Alberta businesses are also supporting them financially. This fall, ATB Financial made a $36,000 investment in the SBI that will sponsor a speaker series and bring industry leaders and researchers – including Hunter and Kazakoff – to rural communities throughout southern Alberta. The purpose of the business education seminars is to share knowledge and experiences on topics pertaining to small businesses.

That expertise is also showcased in Hunter and Kazakoff's second book, which was released earlier this year. Unlike Little Empires though, Small Business: Journey to Success was written primarily for an academic audience, reflecting the researchers' goal to eventually develop new courses within the Faculty of Management that focus on small businesses and bring new knowledge into the classroom.

In the meantime, Hunter and Kazakoff are busy with a number of research projects. The team, for example, has previously examined why small businesses fail (e.g., owners lack passion and focus) and how small enterprises survived the financial crisis (e.g., they were already operating in a fiscally conservative manner). Now the researchers are studying why small businesses typically do not partake in insolvency processes to deal with deteriorating financial situations (e.g., owners usually cannot afford the inherent expense).

Down the road, Hunter and Kazakoff will also look at small businesses' contributions to the local economy and how the agricultural industry has been affected by changes to the Canadian Wheat Board. The researchers also plan to compare the success stories of indigenous entrepreneurs in Canada with those of the Maori in New Zealand.

"Through our research," says Hunter, "we hope to expand our reach locally, regionally, nationally and internationally."

For more information on the U of L's Small Business Institute, please visit:

This story first appeared in the Fall 2012 issue of SAM. For a look at the full issue in a flipbook format, follow this link.