CEO – WAFU ; Special US Counsel – Grupo Mexico
Dear Prime Minister Elect:
I know that constituents don’t normally get to have a say in the development and implementation of the federal policies of new government, but hey, I donated to you, campaigned for you and your team, and most recently voted for you and your party. So please accept the following proposals from someone who worked hard for you and knows a little bit about growing a small business in Canada.
I am the President and CEO of a small company called WAFU (www.wafu.ca). When I started this company seven years ago, we had only one product on the market locally in Quebec (our WAFU Original Japanese-style Dressing with about $250k in annual sales) and now we have more than ten different WAFU products sold across Canada, and are in the process of expanding into the US and Mexico.
Based on this experience, I can tell you that although many of your stated Small Business Policies are helpful (reducing the small business tax, increasing funding for incubators and accelerators and increasing funding and expanding the Industrial Research Assistance Program); they fail to address the single most important factor limiting the growth of small businesses in Canada – the lack of access to reasonably priced capital.
So here is my two cents worth of advice for you and your team on what you can do help small and medium sized businesses access capital in Canada:
- Support the development of a Crowdfunding industry in Canada. Ensure that all of the provinces legalize equity crowdfunding and peer-to-peer lending across Canada, in a standardized and simple manner. There is nothing more empowering to small businesses than to allow its local consumers and supporters to support them by being able to buy their shares and lend them money through the internet.
- Revamp the Business Development Bank of Canada (BDC). The BDC has become too conservative, and too risk averse to be able to properly fund small growing Canadian businesses. Take my company WAFU for example, we have grown 30% year on year for the last couple of years, are profitable and have a good credit record. Yet the BDC will not lend to us because our net income has been negatively impacted by our growth (which happens in most growing businesses) and because my personal net worth is concentrated primarily in my business (i.e. I don’t have other assets or income outside of my Company). So they have deemed WAFU, the number one brand of Japanese-style dressings and mayos in Canada, too risky. This simply makes no sense, and is contrary to the mission of the BDC to support growing Canadian small businesses. This is why you have revamp the BDC in order to instill a much more aggressive risk taking approach to support growing Canadian Small Businesses.
- Expand the R&D Credit Program for Small Businesses. The current R&D Credit Program has been invaluable in helping us to create new innovative products and categories in the packaged goods industry. However recent changes to the R&D Credit program, have decreased the amount or percentage of R&D expenses that are reimbursable. You should roll back such changes and increase funding and support for this great program that helps Canadian Small Businesses to innovate and compete internationally. Moreover, you should provide federal guarantees for R&D Credit receivables so that Canadian banking institutions can easily extend credit to small businesses secured on these receivables.
I know that you will have a lot of things on your plate, but just remember that small businesses are the ones that generate most of the new jobs in Canada. So helping us to access capital is the quickest way to jump start the Canadian economy.
Wishing you and your new government all the best.
Gil Michel-Garcia President & CEO WAFU Inc.