Business comes in all sizes.

As numerous entrepreneurs can attest to, starting and running a business takes imagination, money and no small amount of guts. Businesses are fraught with risk and very difficult to maintain in the long term. Just over one in three actually survive more than five years after establishment. But where would we be without them? Small and medium-sized enterprises (SMEs) are the single largest private employer in Canada, employing more than 6.8 million people across the country.

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Not everyone agrees on exactly what constitutes a "small" or "medium" sized enterprise. Do we mean the number of employees or the firm's sales and revenues? As well, "small" or "medium" often has a lot to do with the industry in question, since a medium-sized company in the services sector would typically have more than 50 employees, while in the manufacturing sector, a company would have more than 100 employees in order to he considered medium-sized. While there is no solid consensus on the exact definition, everyone agrees that these smaller businesses are vital to our economy. Statistics Canada reports that 97.5 per cent of all businesses in the country have between one and 99 employees.

Lyndon Holm is the vice-president and Saskatchewan district manager for Business Development Bank of Canada. BDC is a federal Crown corporation that provides financing, investment and consulting services to 28,000 customers across Canada. Although their clients run the gamut from owner-managers up to companies with thousands of employees, BDC specializes in small and medium-sized businesses, mainly in manufacturing, exporting, innovation and knowledge-based industries.

"BDC evaluates an individual's capabilities, the viability of the business project and the owner's commitment to the project. We rely much less on formula-based credit decisions," Holm says. "Many entrepreneurs need management advice and 'know-how' to start or grow their business. We're unique in that we offer a combination of both lending and advisory services."

Holm says the most common issue BDC business relationship managers in the three Saskatchewan branches (Regina, Saskatoon and Prince Albert) are hearing about is the credit crisis. The economic recession of the last year has made it very difficult for many companies to access sufficient credit, a critical hurdle for SMEs to overcome if they are to survive and grow.

"The amount of capital available to entrepreneurs has shrunk," Holm says. "For example, before the crash in the U.S. last year, companies were being offered up to 75 per cent financing on real estate assets. Today, it's more like 50 to 65 per cent."

"If entrepreneurs can't get the capital, they can't make the investments needed to grow their business. We're providing leverage on fixed assets so that companies can make their investments today rather than deferring them until access to capital improves."

For most financial institutions, start-up projects and small businesses are considered high-risk and there is a limited appetite to finance them, particularly if the entrepreneur lacks collateral. This is especially true for high-growth and innovative SMEs. Because these enterprises often have more intangible than material assets, they frequently have difficulty securing financing from traditional financing sources and thus require larger amounts of unsecured financing.

This, says Holm, is where BDC comes in--to serve those clients who may have difficulty accessing support from other financial institutions. "Many of our clients are in the start-up or 'fast-growth' stage," he says, noting that although start-up businesses represent about five per cent of SMEs in Canada, these start-ups represent 10 per cent of BDC's clients. Similarly, fast-growing businesses make up 13 per cent of all SMEs, but 23 per cent of BDC's customers.

Small and medium-sized businesses are worth investing in. Research has shown that although they represent more financial risk, high-growth SMEs also have greater profit potential. As well, these high-growth performers create a disproportionate number of new jobs (1 million of the 1.8 million net jobs created in Canada from 1985 to 1999). They are also major contributors to innovation, mostly in the information technology and life sciences sectors.

From his experience, Holm says there are two main factors that determine a business's long-term success: a solid product or service and managerial capacity. "The most successful companies have a great niche. The other side is that a business is only as good as its people. When companies invest in their people, it results in good customer service and long-term sustainability."

'Intangible capital' like specialized skills, innovation and technology management often prove to be the make or break factors for a company's success or failure. This "knowledge capital" often contributes as much as physical capital does to a firm's success.

For a long time, many Canadian SMEs have traditionally relied on an abundance of skilled and relatively cheap labour to fuel productivity improvements. However, with the rapid increase in the Canadian dollar, a shortage of skilled labour and increasing labour input costs, this is no longer the case.

"Through our dealings with clients, it's clear that enhancing productivity is more than just the acquisition and installation of new equipment," Holm observes. "To become more productive, firms need to review their business processes from top to bottom and form strategic partnerships with suppliers to achieve economies of scale. Sometimes companies need to consider having more than one supplier -even if it costs more--if this reduces their risk."

An issue that is going to become increasingly difficult in Saskatchewan in the years to come is the search for qualified labour. "We saw the beginnings of the problem in 2006-07, but it has eased a bit with the recession. In the long term, sourcing, training and retaining people are going to be the top challenges here," Holm warns.

This is an area where many companies are beginning to utilize third-party professional services. "Historically, entrepreneurs in Saskatchewan have been more conservative about accessing outside consulting," Holm says. "I think we're going to see an increase in the use of external expertise in the next few years."

Saskatchewan is a place where small businesses can thrive, and our economy continues show strength in the face of widespread economic doldrums elsewhere. "There's a lot to be celebrated in Saskatchewan," Holm says. "We're still growing, despite the downturn in the economy. This makes us unique in North America."

Holm points out that several sectors in Saskatchewan are growing and show profit potential into the future, including mining, oil and gas, manufacturing, biotechnology and agriculture. "I've lived in Saskatchewan all my life and for a good part of that, we've been struggling. It's a great time to live in this province."

RELATED ARTICLE: Small Business Week: OCTOBER 18-24, 2009

Small businesses and the contribution that they make to the national economy are so important to BDC that the development bank created Small Business Week[R] to celebrate these entrepreneurs.

In 1979, a few BDC branches in British Columbia organized a series of business management training sessions that they called "Small Business Week." The event was a success, and other branches soon followed suit in the following year, tripling the number of activities offered.

Today, BDC's Small Business Week[R] has grown to become a nationwide event, with conferences, trade fairs, workshops and business luncheons that provide a forum for learning and sharing ideas. Hundreds of other local public and private sector organizations have become involved with BDC in planning and publicizing these events.

One of the highlights of the week is the Young Entrepreneur Awards gala, which takes place in Ottawa on October 20, 2009. Business people, BDC representatives and government officials are expected to attend the gala. A total of 13 awards will be presented to entrepreneurs aged 19 to 35, selected on the basis of outstanding business achievement, innovative spirit and community involvement.

The theme of Small Business Week 2009 is: "Your dream, your business, your passion." It reflects the efforts of Canadian entrepreneurs of all ages and pays tribute to their important contributions to business in this country.

This October, spend a few minutes to salute the small businesses in your area. Their tenacity, passion and vision are the fuel that keeps our economy going strong.

Statistical information sourced from BDC's Entrepreneurial Insight: Facts and figures on Canadian SMEs, available at www.bdc.ca