Is Ontario beginning to see the importance of main street businesses?

Steven Tavone

In its recent Fall Economic Statement, the Ontario government committed $500 million to supporting small businesses over the next three years. This commitment includes a $40 million investment in supporting community planning, capital improvements, and technology adoption for cities’ main streets and supporting the small businesses that populate them (often called main street businesses). This commitment was a surprise, since it was not referenced in the 2017 budget. Most of Ontario’s small business priorities as of late have largely focused on supporting start-ups. In the past, the provincial government has treated main street businesses as a lower priority because main street businesses have received substantially less funding and supports than their start-up counterparts.

For those that are not familiar with “main street businesses”, the Ontario Business Improvement Area Association defines them as the “businesses set up within the main streets of downtowns in Ontario.” These are your retail stores, your mom-and-pop shops, and your local family-owned restaurants. Essentially, they are everything but tech-oriented start-up companies. Main street businesses are crucial to local economic development because they increase employment opportunities for citizens and support the vibrancy of neighbourhoods through community building and thus deserve the proper attention from the province.

To be clear, I am not suggesting that Ontario has not supported main street businesses in the past—there are several programs and supports that entrepreneurs of main street businesses can receive from their local Business Improvement Areas, Small Business Enterprise Centres, or other non-profit organizations. Both main street businesses and start-ups are considered small businesses by the province, and both offer substantial economic and social benefits to Ontario. However, most of Ontario’s small business priorities have focused on growing and expanding start-ups.

I do understand why the province would focus more on start-ups than main street businesses, as the province has clearly highlighted high-priority sectors that include aerospace, automotive, automation/robotics, life sciences, clean technologies, financial services, and information technologies. Investing in these sectors would significantly boost economic development in the province and increase Ontario’s competitiveness at the international level. The government needs to invest in these businesses to keep Ontario (and Canada) relevant in today’s global economy, and supporting these types of businesses will attract investors from across the globe. Main street businesses, unfortunately, often do not have the luxury of being high-potential, high-growth companies that can expand into international markets and the government has put a lower priority on them. As a result, they are not as attractive to the provincial government for economic development purposes as are start-ups.

Take, for example, the 2016 budget in which Ontario announced the Business Growth Initiative (BGI)—a $650 million strategy to help grow and expand businesses to international markets and create a more innovation-driven economy. The strategy is largely focused on supporting the research and development of innovative ideas and technologies by start-ups. This strategy excludes and neglects main street businesses. In fact, main street businesses are not mentioned in the entire 2016 budget. The 2017 budget released earlier this year does not mention main street businesses either and rarely addresses small businesses in general.

The 2017 Fall Economic Statement commits to improving existing initiatives that support small businesses. These initiatives include the ScaleUP Ventures Fund, the Small Business Innovation Challenge, the Scale-Up Voucher Program, and the Cleantech Equity Fund. All these initiatives are once again targeted toward start-ups, not main street businesses. The ScaleUP Ventures Fund is a $50 million venture capital fund dedicated to start-ups that have high-potential for expansion and growth. The Scale-up Voucher Program dedicates $32 million over 4 years for eligible high-potential start-ups to receive coaching and mentoring from business experts, and up to $1 million in vouchers to offset the costs of expenses. The Small Business Innovation Challenge is a partnership between the Government of Ontario and the Ontario Centres of Excellence (OCE) which provides funding to small and medium sized enterprises to develop technology solutions to two issues presented by the government and OCE.

The trend here is that the government initiatives to support small business are mainly focused on supporting technology-based start-ups that have high-potential for growth and expansion. The provincial government says that these initiatives above support “small businesses,” yet they are only targeting very specific types of small businesses. There are no comparable initiatives available from the provincial government for main street businesses, although there are several entrepreneurship programs to support new entrepreneurs from all sectors. It is unfortunate that those entrepreneurs who are not technology-savvy are limited in terms of where they can access the requisite resources to support the growth and success of their businesses.

Main street businesses deserve the proper attention and support from the government, though perhapsnot to the same degree as start-ups do. While not overall large contributors to provincial and national economic development, main street businesses are important for local economic development and improving neighbourhood appeal.  Ontario’s new commitment to invest $40 million in main street businesses is a step in the right direction, and there should be continued governmental support for main street businesses.

Steven Tavone is a Master of Public Policy candidate at the University of Toronto. He previously completed a Bachelor of Science in biomedical science and health management at York University. His areas of interest include health policy, skills development and employment policy, and economic development policy.