By Nick Petter
An optimistic report by the Royal Bank says Centretown small businesses will become more diverse over the next decade as immigrants and visible minorities take advantage of business openings, but some Centretown small businesses see a tougher road ahead.
The Royal Bank report, released in October, says that more than two-thirds of Canadian family businesses are not passed on to a second generation and are instead sold, creating opportunities for buyers.
A few weeks ago Sameer Waryah and his family opened an Indian restaurant on Bank Street. He says business is good, but starting a small business in Centretown is not for the faint of heart.
“There are a lot of successful people. There are a lot of people who wouldn’t complain. But somebody starting new has got a tough way to go. If he has a great idea, great location, and a great product, it still could be tough for him,” Waryah says, adding he has every intention of keeping his business in the family.
Waryah’s business plan can be summed up in one word: franchise.
He and his family dream of expanding into a chain of restaurants that serve “fine-quality Indian fast-food.”
The previous owner of Waryah’s location on Bank Street, Hernan Sanchez, had a similar dream.
At one point Sanchez had expanded his Continental Bagel café into three locations: one in the Byward Market, one in South Keys, and another on Bank Street. But he was forced to close the Market and South Keys branches when business slowed.
“A big government building moved, and I lost about 40 per cent of my customers,” Sanchez says. “The city’s changing. Before it was better. Even right here in the market, it’s very difficult. I already have customers, so I don’t suffer too much. But for others it’s difficult.”
Amir Masoumzadh of 2 for 1 Pizza Pie says part of the problem is competition from larger companies.
“You see that Quiznos across the street?” he says, pointing from the front window of his shop. “It just opened last week. What’s the sub guy next door going to do? He’s finished. And he opened only two and a half months ago.”
The Royal Bank study reports a growing gap in productivity between large and small businesses in Canada.
To stay competitive, the report concludes, small firms will have to invest more money in their operations.
But the banks may be slow to respond to the investment needs of businesses.
“There’s always a time lag between identifying these things and making a change in policy,” says Ivana Rupcic, an economist at the Royal Bank and one of the authors of the report.
Caroline Hubberstey, spokeswoman for the Canadian Bankers Association, says banks are doing everything they can to streamline small business loans.
“It’s definitely a sector that the banks are actively seeking to finance,” she says.
Pointing to a 2001 Statistics Canada study on reasons why small businesses don’t seek financing,
Hubberstey said that “very few are saying ‘I got turned down’ or ‘I fear I’m going to get turned down.’ A lot of them just feel they don’t need it.”
Sameer Waryah says he wants to invest in his business, but it’s not that simple.
“The banks give you the money, but they give you just enough to get going. But if you want to improve your business, they’re more likely to say no,” he says
A survey of small- and medium-sized businesses by the Canadian Federation of Independent Business found that the percentage of companies applying for loans fell from 73 per cent in 1987 to 60 per cent in 2003.
The survey reported that rejection rates were highest among the younger and smaller businesses.
Waryah says he is optimistic about his future and about the business opportunities for newcomers to Centretown. But he doesn’t expect success to come easy.
“You’ve got to make money to pay off that loan. You don’t want to fall behind,” he says. “You’re going to work day in, day out, putting everything into it, including your sleep.”
“It’s a really tough decision to make. If I put money into my business, in a couple of years, if all goes well, I can pay it off. But it’s a lot of struggle to pay it off. Hard work pays off, it’s true. But it’s not as easy as it sounds.”