West is where the money is

Eric Lam, Financial Post · Monday, Oct. 18, 2010  link to article

It is not easy starting a business at the best of times, but Benjamin Dalziel and Joseph Facciola picked just about the worst time possible when they left Ontario to open a food-and-wine tour business in the upscale resort town of Whistler, B.C., in September 2008.

The concept, a guided three-hour walking tour that includes a four-course dinner spread across four restaurants, seems like a good one, but a risky tourism venture from two guys with little business experience at the apex of global economic armageddon? Seriously?

"Well, I was looking for work in Toronto right as the economy was starting to crumble, and nobody was hiring," Mr. Dalziel said. "Definitely, we were worried [about things like financing and people not vacationing] but we figured if we couldn't pull it off when we're young and motivated, we wouldn't be able to do it later in life."

The enthusiasm and optimism of Mr. Dalziel and other independent business owners for their prospects moving is a major reason why cities and regions in Western Canada continue to hold most of the top spots of the third annual FP/CFIB ranking of Canada's top 100 entrepreneurial cities.

"Optimism levels are considerably higher now than in the past year," Ted Mallett, chief economist with the Canadian Federation of Independent Business, said in an interview. "Alberta, for instance, had a bigger bounceback than most other provinces as it had a bigger drop in optimism [the previous year]."

Cities from Alberta, Saskatchewan and British Columbia account for nine of the Top 10, with Grande Prairie, Alta., at No. 1. The only eastern city in the Top 10 is Saint-Georges, Que., which came in ninth.

The highest-ranked region in Ontario is the greater Toronto area at a disappointing 20.

"There are still some challenges in some of the major industrial areas [in Ontario and Quebec]. Many small firms are doing quite well, but for those dependent on major supply chains in the industries that can be a problem," he said. "I'd put Quebec at the level next to the west," Mr. Mallett said.

David Simpson, a professor with the Richard Ivey School of Business and a local entrepreneur in London, Ont. for 20 years, said he was not surprised by the survey results. "Entrepreneurs 'go where the money is' so it should be no surprise that Western Canada shows great success rates for entrepreneurs," he said in an e-mail.

"Capital sourcing is the most important way to encourage entrepreneurship. An entrepreneur friend of mine from Calgary always said that you can test your business plan quite quickly out West by finding out if money will follow the idea. If you can't raise $1-million in two weeks--that project isn't going to fly."

Western economies are much newer, and deals rely more on merit than on what school the entrepreneur attended, Mr. Simpson said.

"The lack of worry about where you came from and how did you get into my office was borne of necessity as the first wave of entrepreneurs in Western Canada needed to help each other survive," he said.

By contrast, Mr. Simpson has always found both high taxes and government red tape to be particularly frustrating in London (ranked 77), but chose to see it as a challenge.

"I viewed it as a competitive advantage because very few people would put up with how difficult it was to do business here," he said. "Not surprisingly, Ontario is disadvantaged today relative to Alberta and Saskatchewan."

Some of the hardest-hit cities in the recession, such as the auto-manufacturing centre Windsor, Ont.--which ranked 82 -- need a culture change if they want to attract entrepreneurs back to their shores.

"I think we've already hit rock bottom, so there are opportunities here," said Maria, a small business owner in the service sector who has lived and worked in Windsor all her life and wished to remain anomymous. "There are people who want it back, and the auto industry was wonderful for us, but we have to look at it as a thing of the past."

There are plenty of openings for entrepreneurs with new ideas, such as taking advantage of Windsor's relatively low real estate prices to build retirement homes and health care services.

"We are the Florida of Canada," she said.

And while it was tough seeing friends and neighbours leave the city in recent years, that only emboldened those who stayed behind. "We hung in there, we entrenched," she said. "And you do hope they come back."

As for Mr. Dalziel and Mr. Facciola, it turned out many of the high-priced restaurants in Whistler wanted to get involved with their tour, precisely because people were cutting back on discretionary spending.

Two years in, Whistler Tasting Tours is going strong, with Mr. Dalziel heading to meetings with Vancouver restaurant owners af ter the interview.

"We're pretty optimistic about the potential here," he said. "As we recover, Whistler will be on the map."