Dear Premier Wynne and Members of the Committee:
We have listened intently to the hearings held throughout Ontario and are now prepared to comment on the potential that Bill 148 has to disrupt not only the impact that small business has as an economic contributor to Ontario, but also to the social fabric and ability of Ontario to service and support many of those in need.
I would first like to set the stage as I believe the hearings missed many of the important facts about small and medium sized businesses, entrepreneurs and entrepreneurial risk in Ontario.
When companies are started, it is usually through the desires, drive and hard work of one, or a few individuals, to become founders. If the business survives, then at some point that legacy is carried on by either repeating itself through a sale to a new individual, or individuals, or by evolving into an enterprise that can operate independent of the ownership. Each of these potential outcomes contributes to the number of jobs created and economic prosperity for all in Ontario; but it does not come without a cost.
Financing a business is not an easy task; it requires a personal commitment of capital in the form of cash, liquidated savings, dismantled and liquidated Retirement Savings Plans, putting at risk the equity built in one’s home OR asking a family member, friend or private investor to do so thereby, putting their money at risk, and also the entrepreneur’s integrity. It also requires the “Personal Guarantee” of the borrower securing that all funds will be paid back to the supplier of capital at varying rates of interest, sometimes as high as 28% for high risk loans and credit cards. It means putting the financial future of the founder personally, or that of others, at risk of potential loss… a loss that has a 3 in 5 chance of occurring (a 60+ percent chance of becoming reality).
The risk requirements are necessary even before a founder is able to secure traditional lending that will require the entrepreneur to risk absolutely everything they possess in the hope that their idea, product or service survives the day-to-day competition for paying customers. I stress paying, as not every customer pays, nor is every customer honest about their ability to pay. If a business does not survive because of non-payment by a customer, the business won’t be able to pay back the money owed unless the guarantor or entrepreneur pays through whatever future earnings they have, potentially forcing them into bankruptcy.
Owning and operating a business is no guarantee that money will be made, and in some circumstances it is not even a guarantee that the owner will make current minimum wage, let alone the proposed $15/hour. There are often no vacations, no days off, or no sick days unless lucky enough to make it past 3 or even 5 years of being in business. Being a business owner means that there is no option but to show up every day, day-in and day-out, with only the hope and dream that one day you might get paid or be able to enjoy a vacation; that you might be able to call in sick, stay home to look after an ailing parent or child or simply say “I don’t feel like working today”.
Being an entrepreneur and business owner is hard. There is no legislation protecting the economic well-being of the entrepreneur; there is no guaranteed wage; the entrepreneur does not qualify for Employment Insurance, WSIB or many of the tax benefits allowed for the “employee”.
The entrepreneur only benefits from his or her ability to forego many of things taken for granted by most employed Ontarians. This is especially applicable during the first five years of establishing themselves, when a business faces the highest risk of failure. If their business does not survive, there is no way to recover the money, nor time they invested in operations, wages and equipment, the personal relationships lost or damaged, or even their own self esteem.
Should those businesses that survive and grow not be celebrated for their ability to create jobs, advance innovation, become community leaders or even global leaders? Should they not be allowed to build a better Ontario through the creation of wealth and opportunity for all Ontarians?
Companies strive to be efficient in their operating procedures by producing at optimum levels, controlling costs, and marketing effectively. If done correctly, the firm will be able to sustain profitability. The majority of businesses leaders and management agree that if a business ignores the impact it is having on, or can have, on society, profitability will be limited. Business, irrespective of size in today’s modern world, contends that operating efficiently only provides profit up to a point and in order to achieve profit above that limit, companies must work to improve the society around them. If they mitigate any negative impacts they are having on society and provide resources to improve conditions in society, they will find opportunity for additional growth and profitability. This in turn will create more employment opportunities for society.
Business leaders believe that companies must use their resources to benefit more than just the shareholders. Successful companies create wealth and resources. If their excess is shared, all of society will reap the rewards. Business believes that prosperity will continuously find its way to those companies that act ethically and exhibit goodwill toward society.
If society is to continue to accept the granting of substantial rewards for the successful business, it is entitled to expect complete leadership – an approach that combines optimum returns for shareholders with responsibility for social and environmental performance. Company leaders are not only leaders of business but leaders within society. They are part of society and not apart from it.
Despite all of these challenges, entrepreneurs, and the Small and Medium Sized Enterprises (SMEs) that they build, account for the majority of employment in Canada and Ontario. They account for a substantial portion of all charitable funds raised and volunteers hours supplied in all of our communities.
Business accounts for a significant portion of funding for many of the funding gaps that exist in our communities, such as healthcare gaps like capital for hospital construction and equipment, operations of hospice facilities, cancer research, medical travel and specialized treatment as well as family support for ill children and elder care.
Social equity organizations and programs such as food banks, Goodwill, the Salvation Army, the YMCA and many others derive a significant portion of their operating funding from the private enterprise and the small business community. Small business supports under-privileged individuals, families and children by financially contributing to breakfast programs, youth suicide prevention, literacy, basic socialization support, transitions to workplace for the displaced, rehabilitated and impoverished.
The business community is well known for the contributions and work it does to bring social equity to Ontario. Why are we going to jeopardize that through an over-zealous and rushed minimum wage increase and the implementation of an expensive legislative employment burden on small business?
Why is the underlying tone of the hearings and discussions within government affirming and endorsing the belief that all of the benefits forgone by entrepreneurs, whom are creating jobs, are the entitlement of those whom they employ? Is that what is really FAIR in the context of what the employer/entrepreneur/owner brings to the table and takes on as risk to create economic prosperity in Ontario?
The Government of Ontario must take a step back and fully understand that to implement both the proposed minimum wage increase and Bill 148 in its entirety will have the unintended consequence of damaging all that the business community contributes to the well-being of Ontario. The Government of Ontario must understand that there will be significant, sudden and sizable uncertainty for Ontario jobs, its economy and its communities. This uncertainty has been echoed by our membership.
The Sault Ste. Marie Chamber of Commerce represents over 700 businesses and 15,000 employees and we strongly encourage the Province of Ontario, to immediately withdraw the minimum wage increase and Bill 148 so that a more disciplined and time-sensitive approach can be developed in partnership and with the input of Ontario’s business community.
Rory Ring, CEO and Jason Naccarato, President
Sault Ste. Marie Chamber of Commerce