Although studies show that 75% of small businesses fail, Canada’s high business costs add onto the intimidation that is felt by new entrepreneurs. Roy Huang, in his blog post called ‘Unappealing Canadian Costs’, clearly underlines the problems small business owners are facing in regards to costs of rent, goods and start up expenses. The following chart, taken from the Financial Post, shows the stark difference between the United States of America and Canada.

Small businesses increase a country’s GDP and develop networks, infrastructure and allow for innovation. However, when entrepreneurs face the higher costs of starting a business of Canada, they begin to look at other options. Is this ultimately healthy for the Canadian economy? I think not. Similar to why large corporations decide to outsource their labor, jobs are given to people outside of the country. Canadians avoid giving back to their country and ultimately, Canada will plateau in the number of business owners.

Other than the consequence of fewer businesses existing in Canada’s market, pre-existing Canadian businesses cannot compete in pricing when they are up against the States. An example of this is the number of Canadian citizens that cross the U.S. boarder to purchase goods because of the lower costs (and in some states, no taxes). We may not feel the effects significantly at this point, but the increasing trends of moving businesses may soon take a detrimental toll on our economy.

We can already see the effects of the American markets overcoming our own in a case that happened this recent year. Target Co. bought out the Canadian own company, Zellers. Not only did they take away from Canada’s culture by eliminating one of our own brands, but they are now dominating the country. With their fast and effective expansion strategies, Target stores are appearing as quick as the Walmart locations did. In order to prevent Canada from becoming ‘American-ized’, the federal government must take a serious look at the future of Canadian businesses.

Qi Lun (Roy) Huang’s blog post: https://blogs.ubc.ca/royhuang/2013/11/15/unappealing-canadian-costs/

Financial Posts’ statistics on Canadian costs vs. American costs: http://business.financialpost.com/2013/01/21/red-tape-week-the-cost-of-doing-business-in-canada-and-the-u-s/