Canada’s economy dependent on family businesses: report

Family-owned businesses have a significant impact on Canada’s economy, according to new research from the Family Enterprise Xchange Foundation (FEX-F) and the Conference Board of Canada.

The research, summarized in a white paper, reveals that family enterprises generated approximately $574.6 billion in 2017, which accounted for more than 35% of Canada’s real GDP and 48.9% of GDP originating from the private sector.

Family-owned businesses also provide employment for a significant portion of Canada’s working population. The research indicated that family enterprises directly accounted for 6.9 million jobs in 2017, amounting to 46.9% of private sector employment and 37.4% of the entire workforce.

Over 90% of these jobs are in small and medium-sized family enterprises, which the paper described as the “backbone” of Canada’s economy.

“Rooted in communities across our diverse geography, successful family enterprises can sustain a multigenerational commitment to job creation and to the social cohesion that builds community and national prosperity,” Jim Burton, chair of FEX-F, said in a statement.

Additionally, the study found that family-owned enterprises perform better on important business metrics, such as growth and longevity.

Among family enterprises, total revenues grew 14.6% on average between 2007 and 2013, compared 13.9% of all other firms in the dataset. Of firms that were operating in 2007, 70.1% of family enterprises were still operating in 2013, compared to 65.2% of other firms.

“In many Canadian communities, family enterprises are the biggest employers, particularly in small communities. Yet demographics, unintended consequences of tax policy, and a lack of trained advisors are threatening the continuity of family enterprise,” Burton said.

The paper said the full economic impact of family-owned businesses is unclear, and that “more in-depth information is necessary to gain a clearer grasp of the family enterprise landscape across Canada.” It suggested that significant data gaps remain in creating policies that maximize the value of family-owned enterprises to regional economies, strategic industrial sectors and community wellbeing.

Read the complete white paper.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.