The backbone of the Canadian economy

Our view, here at CMG, is that not nearly enough is written about the impact of Canada’s family-owned businesses on our economy – and even our fabric as a nation.

So we were pleased to see – back in mid-September – the release of a joint report from the Conference Board of Canada and the Family Enterprise Xchange Foundation.  Entitled Family Enterprise Matters, the report specifically notes that

“… while conventional wisdom says small and medium-sized enterprises (SMEs) are the backbone of the economy, it is more accurate to assign this function to family enterprises.”

Among the highlights of the report:

• Family businesses were directly responsible for $575 billion in goods and services produced in 2017, or more than 35 per cent of Canada’s real gross domestic product.

• Almost $192 billion of that family-owned GDP came from large family-owned businesses – those iconic names so well known to Canadians, including Bombardier, Loblaws (Weston), Irving, McCain’s, Rogers and many others.

• Family businesses directly employed 6.9 million people in 2017, or 37 per cent of all jobs in Canada.

• It even quotes research from CMG’s own 2015 report on family businesses in Canada, citing as follows:  “…research from Creaghan McConnell Group in 2015 was similar in terms of sample size.  CMG analyzed the performance of medium and large-size FOEs in Canada and found that companies controlled by the 500 wealthiest business families account for 23 per cent of the revenue of all medium and large enterprises in Canada, equivalent to $313 billion.”

Here are three of our own latest observations that we’ll tack on to the combined FEX-Conference Board research:

1. We care about this topic, so the more research on family businesses, the better.  They make enormous contributions to Canada  – in revenues, taxes, jobs, infrastructure, and philanthropy – and the research in both reports proves it. These families  – we like to call them “builders” – aren’t in the habit of telling their own story. Many of them avoid the limelight.  And they too often get criticized for their wealth, sensationalized in the media, and not legitimately recognized for what they contribute. So, we endorse the latest report shining a bright light on their impact.

2. Canada needs a private-sector economy more than ever.  We need homegrown entrepreneurs. The latest research confirms it. These enterprises build and sustain our economy, create business opportunities and generate jobs. We can’t just rely on government to satisfy these needs. Canada needs the companies that business families have fostered, and we’ll continue to speak loudly on their behalf.

3. Let’s keep the research going.  The FEX-Conference Board report makes specific mention of the ongoing need for more information on these enterprises. “Family enterprises, their advisors, and our public policymakers need more accurate information to enhance the future health of the family enterprise landscape,” the report says. “Informed appreciation of the depth and breadth of family enterprises will illuminate economic discussions and ensure that this important driver of the Canadian economy is fully considered in regional and national economic and fiscal policy.”

On this last point, we couldn’t agree more.

It’s why CMG is currently in the midst of the next phase of our research on Canada’s business families. This phase explores the ‘how’ behind enduring business family success. What are the key ingredients of business families that have found a way to last for multiple generations? What are the common challenges they’re up against and how do they confront those challenges? What pitfalls should they be looking out for? What are their key lessons learned?

As part of this research, we’re going to the root source. We’re reaching out directly to business family founders and principals, the heads of their family offices, and to ‘next generation’ family members as well to get their perspectives and keep the conversation going. In doing so, we’re sensing a strong interest in a ‘community of peers’ – sharing information and learning from other families.

We look forward to sharing what we learn.

If you are (or know) someone who is interested in contributing to our research, we’d love to hear from you.