The number of small businesses in Hamilton's economy keeps climbing and is becoming its driving force, according to figures just released from the Hamilton Training and Advisory Board.

While the number of very small businesses (less than five employees) has decreased, the number of businesses with five to 10 employees has grown 20 per cent between 2006 and 2007.

"There has been a tremendous growth in Hamilton of the micro business sector -- those with 10, 12, 15 members," said John Dolbec, president and CEO of the Hamilton Chamber of Commerce.

"In the chamber's membership of 2,000 or so businesses, 72 per cent of businesses are that small."

It's a trend that's reflected in southwestern Ontario but is particularly strong in Hamilton.

The study shows the share of small business (excluding self-employment) in Hamilton grew from 15.3 per cent to 18.3 per cent between 2006 and 2007. In Ontario, that figure jumped from 13.8 per cent to 16.8 per cent.

Yet Dolbec says this radical shift hasn't registered with many policy-makers.

"The whole Hamilton economy, the whole Hamilton culture, has changed. There's a whole raft of changes that are significant, but our decision makers are still (thinking) that (large) manufacturers are still involved. They're not."

Kelly Bistas, controller at P&A Plastics, agrees.

The downtown company was established in 1995 and has had about 10 full-time employees ever since.

The company's employees live in the region and a good part of its "bread-and-butter" customer base is in the Golden Horseshoe.

But Bistas said most governments don't recognize the value of small businesses in local economies by offering help, such as tax relief.

"If (cities) want to keep an atmosphere of helping business, they need to give those signals," she said.

Dolbec said while manufacturing is still a key force in the city, the finance, insurance and real estate industries have been identified by the chamber as emerging growth sectors.

The new report notes the most common kinds of businesses with fewer than 10 employees involve agriculture, construction, retail and service.

There's no doubt that the gains of small business in Hamilton are due at least in part to the heavy losses in manufacturing.

Sandie Heirwegh knows that first-hand.

She's president of The Entrepreneurial Edge, an international small business consulting firm and a partner with the Hamilton YWCA's BizSmartz program, which helps those who have received unemployment insurance start their own businesses.

Her client base, mostly male and over 40, has doubled in the past six months as displaced factory workers seek new jobs.

"They know what it's like to work hard and some have managed to turn it into a business reality," she said.

One of her clients, a 50-something man, had only ever been employed by one company, for 32 years, before receiving his pink slip.

Last year, he started a janitorial company and has already hired two part-time employees.

"He's done extremely well," she said. "He's exceeded sales projections we worked out for him."

Dolbec said the growth of small business means communities must shift their thinking in a number of ways.

Key fundraising groups, such as the United Way, that have traditionally relied on payroll deductions must be more creative in tapping into smaller companies.

In addition, the loss of jobs in manufacturing often means a drop in income and a loss of union jobs, and that can affect a city's social fabric.

At the same time, more small businesses also means less vulnerability to plant closures or market volatility.

"Small businesses can be more adaptable to the marketplace," Dolbec said. "I'd rather have a whole bunch of hits rather than one big home run."

lmarr@thespec.com

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