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Canada proposes new language test requirements for citizenship
Becoming a Canadian citizen is about to get a little harder after the government served notice it plans to require that applicants pass a language test as well as the existing citizenship test.
In a notice published Saturday in the Canada Gazette requesting comments, the Citizenship and Immigration department says applicants between the ages of 18 and 54 will have to submit proof that they can mastered English or French to at least the Canadian Language Benchmark Level 4.
However, unlike recent changes to the immigration rules which came under fire for requiring those whose first languages were English or French to pay for language tests, the proposed citizenship rules will allow candidates to submit alternative evidence such as proof they completed their secondary or post-secondary education in English or French.
The proposed changes also spell out that the testing include listening and speaking skills.
Currently, the government uses the citizenship test and the candidates’ interaction with government officials to judge whether they speak English or French well enough to meet the language requirements for citizenship.
Announcing the plan, Citizenship and Immigration Minister Jason Kenney said the move is intended to improve the ability of new citizens to settle and integrate into Canadian society.
“The ability to communicate effectively in either French or English is key to the success of new citizens in Canada,” Kenney said in a statement. “This change will encourage applicants to ensure that they can speak English or French when they apply for citizenship, thereby improving the integrity and effectiveness of the citizenship program for Canada and for new Canadians alike.”
Government officials say the move is a popular one with citizenship court judges and will allow the judges to focus their attention on assessing other areas of an application, rather than try to determine whether candidates can communicate well enough in English or French.
The move is expected to affect an estimated 134,000 a year.
The move is expected to affect an estimated 134,000 a year.
Cathryn Sawicki, an immigration lawyer in Toronto, says the move will primarily affect refugees, family class immigrants and those allowed to immigrate to Canada on humanitarian and compassionate grounds. Under recent rule changes, most classes of immigrants already have to pass a language test before being allowed to come to Canada in the first place, she pointed out.
Sawicki said it means it will be harder for some people to become Canadian citizens.
“Sometime you have individuals who are illiterate. So they may not do very well on the written test but perhaps their ability in spoken English is much better so when they go to the hearing they do better there. It may not be Canadian Language Benchmark 4 but that does not mean that they should not be given this privilege.”
Sawicki said the language testing also creates two classes of newcomers to Canada.
“It’s creating a divide in society between the individuals who are highly educated. Those who have had the privilege of education and the luxury of being able to learn to read and write versus refugees or family class individuals who may not have had the same privilege but still contribute to society.”
Winnipeg lawyer David Matas says the move transfers the cost of language assessment, currently born by the government, to applicants. While it benefits the bureaucracy, it can cost hundreds of dollars to get language testing done, he pointed out.
Winnipeg lawyer David Matas says the move transfers the cost of language assessment, currently born by the government, to applicants. While it benefits the bureaucracy, it can cost hundreds of dollars to get language testing done, he pointed out.
Those who want to comment on the proposal, will have 30 days to do so before the government moves to change the current regulations.
elizabeththompson@ipolitics.ca
A quarter of Hamilton's current residents are born outside the country and Statistics Canada anticipates that figure will jump 3 per cent by 2031.
But despite that large percentage, newcomers settling into their lives still encounter discrimination and social exclusion and don't always feel welcome. There are common beliefs and assumptions about newcomers that make their integration more difficult.
The Spectator asked local settlement workers, city staff and ethnic community leaders to highlight the top myths about immigrants they come across. We arrived at 10 common misconceptions and attitudes and looked to address them with recent research.
The City of Hamilton recognizes both the necessity of attracting immigrants and the challenges they face when they arrive here. The Hamilton Immigration Partnership Council (HIPC) was created in 2009 to “strengthen, broaden and enlarge” the presence of immigrants in the city. The process involves identifying and addressing problems that newcomers face as well as showcasing immigrants' contributions to the community.
Citizenship and Immigration Canada recently held a series of cross-country consultations with stakeholders and the public to determine appropriate immigration levels and a suitable mix of economic class, family class and protected persons.
Rather than being just a big-city phenomenon, more than a quarter of the Canadian population in total is expected to be foreign-born in 30 years. A federal government backgrounder says Canada needs to increase immigration to almost 4 per cent of our population from the current 0.8 per cent to support our “old-age dependency ratio.”
“There are lots of myths and misconceptions around immigrants and immigration,” HIPC program manager Tim Rees said, adding these perceptions exist because immigration changes “the nature of our community” and affects our personal identity.
“There's always a fear of the unknown,” he said.
Dr. Bruce Newbold, a professor of geography at McMaster University who has studied the subject of immigrants and homelessness, cites another reason.
“You hear the worst cases. They are the cases that get brought to our attention. But you never hear the good pieces associated with (immigrants). The arguments that run counter to those myths — we hear those less.”
Success stories are important for demonstrating that newcomers are valuable to the city, Rees said. “They contribute to the economy and they contribute in all sorts of other ways as well — to the social and cultural lives and
vibrancy of the city.”
Here are 10 typical assumptions about newcomers and stories of immigrants who have defied them.
Myths
1. Immigrants steal jobs from residents born in Canada
The disavowal of foreign credentials or work experience often makes it difficult for newcomers to compete with others who have lived in the area longer.
The unemployment rate among recent immigrants in Hamilton in 2006 was 11.5 per cent. That’s twice as high as the rate for nonimmigrants. The gap in employment becomes smaller the longer the newcomer lives in Canada.
Almost half of recent immigrant families to Hamilton have an income below $40,000 and have a child poverty rate of more than 50 per cent, the highest of any subpopulation in the city.
Immigrant women, in particular, have a difficult experience finding work, as the unemployment rates for women in this group between ages 15 and 24 was about 19.9 per cent in 2006. This figure was twice the rate for women in this age range born in Canada.
Christine Wong, a settlement support worker with the St. Joseph’s Immigrant Women’s Centre, knows many immigrants who have lowered their standards when it comes to finding jobs and have taken positions that pay about 30 per cent less than the mainstream wages.
“We are at a disadvantage when we compete for jobs with the locals … We don’t have the local experience,” she said, adding many workplaces do not recognize foreign credentials. In fact, more than half of newcomers to Hamilton end up working entry-level jobs such as food-counter attendants, truck drivers and cashiers.
2. Newcomers are a drain on society, are lazy and tend to live off social assistance
Recent immigrants living in poverty depend less on social assistance and more on family support than other impoverished Canadians.
Only 16 per cent of immigrant families living in poverty were receiving social assistance benefits in 2004, compared to 33 per cent of Canadian-born low-income families who received benefits from social assistance programs.
That year, a third of low-income working-age recent immigrants were considered working poor, just a bit higher than the 27 per cent of other low-income persons who reported enough hours to be considered part of the working poor group.
Statistics suggest that immigrants bring skills and education and want to use them as quickly and “effectively” as they can, said Tim Rees, the city’s program manager of immigration. “And it’s difficult. There are barriers,” he said. “They want to work. They want to feel part of our community.”
A report released in 2007 revealed that the percentage of low-income, recent immigrant adults who had work-limiting disabilities was 11 per cent, significantly lower than the 26 per cent of other low-income Canadians who could not work because of their disabilities.
The definition of “immigrant” comes into play again in this discussion, Wong said.
Refugee claimants tend to rely on social assistance more because of the language and education barriers to finding employment, but many people do not differentiate between them and other categories of newcomers, she said.
But 60 per cent of newcomers recruited by Citizenship and Immigration Canada fall within economic class, while 26 per cent are family class and 14 per cent are refugees.
3. Newcomers to Canada are unskilled or uneducated
Actually, immigrants tend to come into the country with more education than their Canadian-born counterparts.
In 2006, more than half of the recent immigrants reported having university degrees, while only 19 per cent of the Canadian population had obtained one. Fewer immigrants were also without a high school diploma (9 per cent) compared to the Canadian average of 23 per cent.
In Hamilton, almost 40 per cent of working-age newcomers arriving in the city from 2003 to 2008 had a university degree or higher. More than 10 per cent had a master’s degree and 2.5 per cent had a doctorate.
This means that these recent immigrants were twice as likely to have a university degree, compared to other Hamiltonians ages 15 to 64.
Furthermore, reports show that low-income recent immigrants have usually completed higher levels of education compared to most other low-income adults.
In 2007, more than a third of immigrants considered to be in the low-income category had a university degree, while most other low-income adults had not graduated from high school and only 12 per cent had completed university.
Studies have shown that recent immigrants are also much more likely to be overqualified for their jobs and to stay overqualified in their employment positions for longer than Canadian-born residents.
A Statistics Canada report released in 2006 found more than 50 per cent of immigrants who had been in Canada 10 years or less with a university degree had worked in a job requiring only a high school education.
In comparison, 28 per cent of the Canadian-born population was found in the same situation.
However, an estimated 40 per cent of immigrants to Canada are working in the field for which they received training. For example, in 2008, more than 21 per cent of all physicians practicing in Canada were trained outside of the country.
In 2007, more than 6,000 entrepreneurs and investors became permanent residents in the country.
4. There are too many
Canada’s population is expected to increase to 35 million by 2015, but this is actually a decrease in annual growth rate.
While the rate between 1996 and 2005 was 1.1 per cent, the figure for the span between 2006 and 2015 is expected to be 0.9 per cent. This is attributed to the decline in the natural increase in population, which is births minus deaths, caused by low fertility rates and the slower increase in life expectancy.
International migration made up two-thirds of the country’s population growth in 2006. And immigration is expected to contribute to the country’s population growth, accounting for about 67.5 per cent of the population increase by 2015, cumulatively.
As the population grows, so will the country’s labour force. By 2031, it is expected to grow to a number between 20.5 million and 22.5 million people, up from 18.5 million in 2010.
In that same time frame, about a third of the labour force is expected to be foreign-born. In Ontario, this figure is projected to be 41 per cent.
But if Canada closed its doors to immigrants over the next two decades, the labour force would be reduced to less than 18 million by 2031 and start shrinking in 2017.
Locally, Hamilton does not have enough locally-raised people to fill the 29,000 jobs expected to be created by economic expansion and 21,000 positions made available because of retirement between 2006 and 2016.
5. Immigrants do not know how to speak English or do not want to learn to speak it
Almost all recent newcomers to Hamilton have a knowledge of one of Canada’s two official languages. About 92 per cent of immigrants arriving between 2001 and 2006 knew English or French.
About 30 per cent of immigrants say they speak English or French at home, while 62 per cent speak another language. The remaining newcomers speak a combination of official and other languages in their homes.
A Statistics Canada study released in 2005 found 58 per cent of recent immigrants surveyed said they were able to speak English well or very well after being in the country for six months. After four years, 69 per cent reported this level of English proficiency.
The more proficient an immigrant’s English is, the better the chances are of being employed. Those who reported speaking English well or very well were more likely to be hired in an “appropriate” job than those who indicated speaking the language at a lower level.
Italian is the most-spoken unofficial language in Hamilton.
Eighty per cent of the over a million newcomers to arrive between 2001 and 2006 spoke something other than English or French as their first language. The largest linguistic increases were the Chinese dialects — which were Canada’s third-most common mother tongue group — Punjabi, Arabic, Urdu, Tagalog and Tamil.
However, many times the myth that immigrants cannot speak English is based on an assumption about the newcomer’s accent, says Arsim Aliu, the YMCA’s immigrant settlement services program manager. “In fact, that person speaks very well in English, (but) you create that perception based on that person’s look or where they come from.”
Proficiency in one of the two languages is one of the six selection factors for skilled workers, who are assessed on their ability to listen, speak, read and write in English or French.
Skilled workers and professionals have to do an approved language test.
6. Immigrants increase the crime rates in the neighbourhoods in which they live
Research indicates that immigrants to Canada have lower overall crime rates than those who are nonimmigrants.
Furthermore, as the number of newcomers to Canada surges, overall crime in the country has continued to drop.
A study in the 1990s by the Correctional Service of Canada found that immigrants in all regions and age groups were under-represented among those serving two or more years in federal penitentiaries.
Stereotypes linking ethnic minorities and crime are formed because the issue of racial visibility, Wong said. “Because immigrants are visible — by their names, their look or their skin colour, people just jump to conclusions: ‘Oh, they are immigrants. They are criminals.’”
In fact, the immigrant is often used as the scapegoat for dominant society’s anxieties over identity, Rees said. “We don’t have the comfort level, the confidence necessarily, to live in a diverse and multicultural, multireligious community,” he said.
“And, partly, it’s our own insecurities and so the immigrant is an easy target.”
7. Immigrants do not want to integrate into “Canadian society”
Immigrants are more likely to become Canadian citizens than eligible newcomers in other similar countries.
A study published in 2005 found that 84 per cent of immigrants who had lived in Canada for at least three years were Canadian citizens in 2001. Meanwhile, in the U.K., only half of the immigrants who had lived in the country for five years were British citizens, and only 40 per cent of foreign-born residents had become citizens in the States.
Eligible African and Asian immigrants in Canada are more likely to obtain citizenship than those coming from the U.S. or Europe.
According to the 2006 census, 73 per cent of people born in another country have become Canadian citizens. In Hamilton, 80 per cent of immigrants have obtained citizenship.
“Compared to other countries, immigrants become Canadian citizens at a much higher rate than other places and as soon as they possibly can, as soon as they’re eligible,” Rees said.
“In terms of level of enthusiasm and level of commitment on the part of newcomers, they absolutely want to be part of Canadian society and identify strongly with Canadian society. And the symbolic importance of becoming a Canadian citizen is a good measure of that commitment.”
Rees also pointed to the increasing trend of mixed marriages in the country as an interesting phenomenon.
According to Statistics Canada, the number of mixed-race married and common-law couples had increased by a third in 2006 compared to 2001. The large majority of these couples were of a white person and a visible minority. Japanese people were the most likely to be part of a mixed union.
8. Newcomers are all the same; they all come with similar experiences
There are various definitions of immigrants and refugees.
An economic immigrant is selected based on his or her skills and ability to contribute to the country’s economy. This category includes skilled workers, business people and provincial nominees. About 41 per cent of the immigrants who came to Hamilton from 2003 to 2008 were in the economic class.
Family class immigrants consist of close relatives of a sponsor in Canada, including spouses, common-law partners or conjugal partners, dependent children, parents and grandparents. About 27 per cent of the immigrants to Hamilton from 2003 to 2008 were in this class.
Business immigrants include there groups: entrepreneurs, self-employed people and investors. Business immigrants’ permanent residency status is assessed on their ability to establish themselves economically in Canada.
A convention refugee is a person who is outside of the country they originally lived in because they are unable or, by reason of fear of persecution for reasons of race, religion, nationality, membership of a social group of political opinion, unwilling to return.
Government-assisted refugees are selected for resettlement in the country as members of the Humanitarian-protected Persons Abroad classes and receive assistance from Ottawa.
A refugee protection claimant is someone seeking the protection of Canada upon arrival. He or she can apply for permanent residence when a final ruling is made that he or she is a “protected person.”
Privately-sponsored refugees are not sponsored by the government but are selected from abroad and receive resettlement assistance from other sources.
Foreign workers are in the country on a temporary basis and must have employment authorization.
9. Newcomers seclude themselves in geographical clusters or ghettos in cities
A 2004 Statistics Canada study that examined the three largest metropolitan areas in the country noted a large increase in the tendency of visible minorities to live in the same neighbourhood. But this trend is not about a desire to be separated from mainstream society.
Within these cities, minority neighbourhoods — which are areas in which a single visible minority group makes up more than 30 per cent of the population — exploded in a decade, rising to 254 in 2001, up from the six that existed in 1981.
The report found that the development of these neighbourhoods was largely due to the population growth through immigration over the past 20 years. The residential concentration of South Asians in Montreal and Vancouver and Chinese people in Toronto made up more than 40 per cent of the increased tendency to live within “own group” neighbourhoods.
But research shows the expansion of ethnic neighbourhoods is more a product of the increasing percentage of the group’s share in the city’s population than a rise in its overall residential concentration. Co-residence of members from different groups is a common feature in these neighbourhoods.
The concentration of newcomers in a particular geographical area does not mean they do not want to be included in mainstream society, Rees said.
“Partly it’s the housing market,” he said. “Newcomers (are) struggling with finding jobs and don’t have much money so they’re looking for the cheapest places to live. So there’s a tendency to congregate as a consequence of the housing market rather than an inclination to want to live within their own community.”
In Hamilton, there are various districts in which immigrants have established communities and ethnic-based businesses over the years. For example, one out of five people in Stoney Creek have an Italian background. In the section bordered by Green Road, Barton Street, Millen Road and Highway 8, 38 per cent of the population is of Italian descent.
In city’s North End, the neighbourhood bounded by Cannon Street and York Boulevard to the water from and from Wentworth Street to the high-level bridge, is 19 per cent Portuguese heritage.
Immigrants also live together because it provides them with more support from others who speak their language, Wong said. “For other lookers … they might assume they like to live together (because) they are not sociable with Canadian society. But it’s not true. It’s because of the social supports they get from their own community, mainly that’s the reason,” she said.
10. Newcomers receive special treatment (i.e. the social assistance they receive is higher than some Canadians’ wages, they don’t have to pay taxes)
“It’s very easy to use newcomers and immigrants as an easy population to blame, to ignore, to dismiss, to think that they’re getting unfair advantage over the rest of us. And they don’t,” Rees said.
Immigrants are required to pay the same taxes as all Canadian citizens and must also declare their income from all sources both from within the country and outside. They are also entitled to the same tax credits as other Canadians, including the Child Tax Benefit and the HST credit. They do not receive additional tax credits.
While low-income recent immigrants in 2004 seemed to be better off than other Canadians in terms of their income situation — they would have needed 32.5 per cent more family income to escape poverty while other low-income Canadians would have needed a 36.7 per cent raise — immigrant families were less reliant on social assistance than others in the category.
The federal government provides several programs to help refugees settle into their new country. The assistance available is often not long-term and not given to those who can sustain themselves or their families.
The resettlement assistance program, for example, helps refugees pay for temporary accommodation, basic household items and general orientation for up to one year or until they become self-sufficient.
The immigration loans program lends out funds to refugees for travel documents, transportation to Canada and costs of medical examinations abroad. Loans are awarded based on the applicants’ situation and their ability to pay it back with interest.
In addition, the interim federal health program is for refugee claimants, resettled refugees and victims of human trafficking who are unable to pay for health care. Parties receive benefits under this program until they are eligible for provincial coverage or a private health plan.
Sources: Statistics Canada, Hamilton Immigration Partnership Council, Human Resources and Skills Development Canada, Hamilton’s Vital Signs
The Canadian Press
Date: Friday Sep. 16, 2011 6:41 PM ET
CALGARY — Ottawa is mulling ways to tap into the U.S. labour force as worker shortages loom on our side of the border, the federal immigration minister said Friday.
"We're at a preliminary point of examining ways that we could do a better job of accessing unemployed American labour," Jason Kenney told a business audience in Calgary -- a city all-too familiar with worker shortages, especially in the oil and gas sector.
"There are a number of policy things that we're considering. I don't want to go into too much detail...We think, particularly in the energy industry, that may be a significant solution to some of the emerging labour market shortages."
The U.S. unemployment rate was just over nine per cent in August, whereas in Alberta -- where a renewal in oilsands development may soon lead to another bout of labour tightness -- the unemployment rate was only 5.6 per cent.
There are "a lot of skilled tradespeople in the U.S. who could walk straight into productive jobs here. We should see if there's something we can do in the rules to facilitate having those unemployed Americans contribute to our economy," Kenney said.
There are provisions under the North American Free Trade Agreement that enable workers to move easily between countries. But the number of those visas granted each year is capped, and only apply to certain types of occupations, Kenney said.
"It's a very good model, but it's very limited," Kenney said.
"We, as a government, have begun thinking about how we could perhaps expand that model."
Kenney also announced Friday that consultations are set to take place in Calgary next month on the federal Temporary Foreign Worker program, which he admits has been "maligned and misunderstood" by its critics.
The program enables companies to bring workers to Canada from around the world on a temporary basis, so long as they can prove they can't get the labour closer to home.
Some 185,000 such workers came to Canada last year, 58,000 of whom ended up in Alberta. Critics of the program argue workers who come to Canada under the program are often exploited.
In his remarks to the Calgary Chamber of Commerce, Kenney took aim at those accusations.
"They paint this picture of some sort of Industrial Revolution sweatshop or something that these people are coming to. Let me say, that most of the critiques of the Temporary Foreign Worker program are ridiculous, unfounded," Kenney said.
"When I meet temporary workers across Alberta, they say to me that they're able to earn in this province in a couple of days what it would take them a month to earn back in their country of origin. And that, for them, represents over a year or two a life savings to start a new business, to build a new home."
Read more: http://www.ctv.ca/CTVNews/Canada/20110916/jason-kenney-says-canada-should-tap-us-labour-110916/#ixzz1auDKubiA
The Canadian government will be restructuring the country’s temporary foreign worker program.
Federal Citizenship and Immigration Minister Jason Kenney recently told the audience at a meeting in the western city of Calgary that the streamlined program will make it easier for employers to hire foreigners on a temporary basis.
Kenney has already been meeting with stakeholders across Canada over the past few months on the programme and how to restructure it, and will be holding another set of meetings in October in the western province of Alberta.
in Alberta, employers in the oil and gas sector, as well as those in agricultural and construction sectors, have been clamouring for a more relaxed foreign worker program, as well as an immigration system that does not put too much emphasis on higher education.
The argument is that while Canada does need highly qualified engineers and others, it also needs plumbers, electricians and those that can work in the oil patch, but do not necessarily possess higher education certificates.
Meanwhile, Kenney is also suggesting that Canada’s oil patch should discuss bringing in unemployed workers from the south of the border, in the US.
Canada needs nurses. Lots of them.
According to Health Canada and the Canadian Nurses Association, Canada might need up to 113,000 nurses by year 2016.
Generally, the shortage of nurses is a worldwide phenomenon, for reasons ranging from increasing population to diseases becoming treatable.
And in many countries, such as Canada, the population is also ageing, and therefore demand for geriatric care is increasing.
And in many countries, such as Canada, the population is also ageing, and therefore demand for geriatric care is increasing.
In Canada, nursing population is also ageing: in 2006, the average age of a nurse was 45, with about a third over 50 years.
In fact, a former official of the Canadian Nurses Association has said securing sufficient nurses would be vital for the sustainability of Canada’s health care system.
In fact, a former official of the Canadian Nurses Association has said securing sufficient nurses would be vital for the sustainability of Canada’s health care system.
Those in Demand in Canada
The latest list of High Demand Jobs issued by the Canadian ministry of immigration lists three categories within the nursing profession.
Head Nurses/Supervisors
Registered Nurses
Licensed Practising Nurses
Registered Nurses
Licensed Practising Nurses
At present, just under eight percent of Canadian nurses are foreign-trained but this can be expected to increase as Canada tries to meet the demand. As well, Canada is becoming very diverse and in some parts of the country, such as the Greater Toronto Area, health institutions carry notices in more than one language.
How to Apply
Nursing in Canada is delegated to provinces/territories and, as such, it is they who regulate the profession.
Anyone needing more information about immigrating to Canada as a nurse, and sitting for the exams can approach the local consulate/embassy/high commission. More information can also be found at the website of the Canadian Nurses Association.
Nursing in Canada is delegated to provinces/territories and, as such, it is they who regulate the profession.
Anyone needing more information about immigrating to Canada as a nurse, and sitting for the exams can approach the local consulate/embassy/high commission. More information can also be found at the website of the Canadian Nurses Association.
In just two years, Doug Burgoyne and his environmentally friendly company, Frogbox, have leapfrogged across Canada. Now, the company is hopping across the border.
But is it really the best time for a U.S. expansion?
Frogbox started in 2008 with a corporate store in Vancouver. The company rents stackable, sturdy, green plastic bins to customers for residential and commercial moves, as a green alternative to cardboard boxes and tape.
The following year, they opened a location in Seattle. Then they came to Toronto.
“What we found is our biggest value point is convenience,” Burgoyne says, adding that suits him just fine. “In that case, we’re helping the environment by influencing someone who normally wouldn’t even consider that as important.”
In January, Burgoyne struck gold with a successful appearance on Dragon’s Den. Investors Jim Treliving, chairman and owner of Boston Pizza International Inc., and Brett Wilson, chairman of Canoe Financial, invested $200,000 for a 25 per cent stake in Frogbox.
The business exploded. It received 500 franchise applications in the first 10 days after the show. “These were really good, qualified people who said they had $100,000 ready to invest,” Burgoyne says.
The company went from three locations to 21 in just seven months.
“We thought, ‘The U.S. economy is not where it should be. Let’s postpone that, get Canada up and running, and further develop the brand.’”
The American economy has taken much longer to recover than many predicted. Three years after the recession, the housing market is still stuck and the jobless rate is over 9 per cent.
What’s worse is that the outlook isn’t very positive. With the debt crisis in Greece threatening to pull Europe’s economy into recession, many economists are worried that North America will slip into reverse gear as well.
Frogbox managed to open a handful of new franchises in select U.S. cities: Minneapolis, Boise, and Madison, Wisconsin.
“Now we have hundreds of franchise requests from all over the U.S., but the economy down there is just not where it needs to be,” Burgoyne says.
“The housing market is not good. We don’t know if it’s going to be a double-dip recession. The uncertainty is the big scary thing down there.”
That’s left Burgoyne unsure about whether to open more stores in the States right away or wait it out.
Waiting would give more certainty on the economy and ensure the company is not spread too thin. But slowing down expansion could give rivals a chance to pop up.
How does a small business owner know when it’s the right time to expand?
“There are lots of ways to gauge it,” says John Pliniussen, a professor who teaches marketing and innovation at the School of Business at Queen’s University. “The first step is most crucial: You have to be very good at what you’re doing right now in Canada.”
Most Canadian entrepreneurs in this position naturally look to our southern neighbour, which is more similar to us than any other foreign market.
The deep malaise of the U.S. economy is a problem.
“That means you will need to get in there with a better business product and a better business model,” says Alec Morley, a senior vice-president with TD Canada Trust. “You’re taking a slice of the existing pie. The pie down there is not growing right now.”
Although the American market can seem very similar to Canada, it is different in one crucial way: in its level of competitiveness.
“A lot of Canadians just aren’t aware of how aggressive and competitive the market is in the U.S. They really know how to hustle,” Morley says. “It’s not uncommon for Canadians to get their heads handed to them down there. Canadians have to be prepared to compete at a higher level.”
That means your business must be in tip-top financial shape before you expand.
“A lot of people get overextended when they try to expand. Small businesses confuse top-line revenue growth with bottom-line profitability,” Morley explains.
That means they take on many new orders, but then don’t have the cash flow to buy materials or deliver the service.
“Banks can help you manage that cycle, but they want to see that the company has a lot of working capital and a profitable bottom line,” Morley says.
Locking in exchange rates is important for Canadian entrepreneurs, he adds. “Otherwise, your business becomes as much about speculating in exchange rates as the original product or service it was intended to deliver. You get it wrong on the exchange rate, and you can lose a lot of money.”
Your banker can help by using a futures contract to lock in an exchange rate for a set period of time.
In fact, the banker should be just one of three expert advisors.
Morley says businesses also need advice from an accountant and a lawyer who are well-versed in the company’s history and business, as well as cross-border business issues. “That’s the three-legged stool every small business owner should have access to.”
Burgoyne is considering whether it’s better to franchise or open corporate stores. The former requires less capital but offers a royalty that’s lower than the profit margin the business would get if it stuck to corporate stores.
“The key when you enter another country is to make sure you spend a lot of time selecting your first handful of locations,” Pliniussen says.
“Whether you go corporate or franchise, these are the units everyone will scrutinize and think about.”
Right now, Burgoyne and his partners are doing sophisticated financial analysis as they try to come to a decision.
“We have pages of spreadsheets and best- and worst-case economic conditions based on an expansion with franchise versus one with corporate stores,” he says.
“We run hundreds of scenarios, but, at the end of the day, you have to go with your gut. There’s no right or wrong answer. You have to understand the potential outcome based on scenarios and make a decision.”
Within five years of first opening Frogbox, Burgoyne wants to be in the 100 biggest cities in North America.
“The question is, will we do it in 2012 or do we wait a year, focus on Canada, conserve cash and, when the economy starts to turn around, jump into it?” he says.
“It’s not a matter of ‘if’ we go into the U.S. We’re there.”
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