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Canada lags U.S. in support for women-owned businesses

Government, large corporations can do more to support business diversity, according to sources
Dionne Laslo-Baker is founder and CEO of DeeBee’s Organics

The number of women-owned businesses – companies that are at least 51 per cent owned, managed or controlled by women – is growing in B.C.

There are 74 such businesses based in B.C. that are certified by the Women Business Enterprises Canada Council (WBE Canada). They collectively account for around 12 per cent of women-owned businesses in the country.

Despite some progress, both Canada and B.C. fall significantly behind the United States when it comes to supporting women- and minority-owned businesses, according to business owners and industry leaders.

“In the United States, if you’re looking to build a business and export, there is quite an emphasis on being minority- or women-owned,” said Dionne Laslo-Baker, founder and CEO of Victoria-based DeeBee’s Organics, which was one recognized by the Women Presidents Organization (WPO) this year as being one of the fastest-growing women-owned or women-led companies in North America.

U.S. retailers such as Kroger (NYSE:KR), Walmart (NYSE:WMT), Costco (Nasdaq:COST) and Target have initiatives to provide extra support to women-owned businesses, along with specific supplier diversity programs that help companies like Laslo-Baker’s get into retail grocery spaces, she explained.

“For example, there are programs where – instead of getting paid at 30 or 45 days – you might get paid in 16 days as a certified woman-owned business. So that can really help with cash flow … and means a lot to your bottom line,” said Laslo-Baker.

And many U.S. companies have targets for generating a certain number of orders from female-founded or minority-founded businesses. Walmart, for example, reported sourcing more than $13.1 billion in goods and services from diverse suppliers in 2020.

However, the story is different on this side of the border, where women- or minority-owned businesses remain a remote concept for many companies. Laslo-Baker says businesses like hers don’t receive the same level of support as they do in the U.S., and that support can vary between the U.S. and Canadian divisions of big retailers.

“When I reached out to retailers in Canada, they said, ‘What are women-owned business needs?’ and ‘What is a certified woman-owned business?’ They’re starting to learn a little bit about what it is but I think we could be doing a lot better in Canada,” said Laslo-Baker.

“Whether it’s people of colour, the LGBTQ plus community or women-owned businesses, we have a tougher time breaking through, so if there are initiatives, it really helps.”

Lack of government involvement

A key factor in the difference in support for women- and minority-owned businesses between the U.S. and Canada is government commitment, according to Silvia Pencak, president and CEO of WBE Canada.

Supplier diversity originated in the U.S. back in the 1960s when the U.S. federal government signed on to support minority businesses, especially black-owned businesses. The U.S. government women-owned businesses to its commitment in the 1990s and by the 2000s, there was a commitment that diverse businesses account for 15 per cent of national federal government contracts. President Joe Biden’s administration has since increased that commitment to 25 per cent by 2025.

“So the suppliers who want to do business with government in the U.S. have to have a 25 per cent spend with diverse businesses, which is an incredible commitment because that creates lots of opportunities for small businesses,” said Pencak.

“That commitment does not exist in Canada where supplier diversity has had a very different journey.”

Supplier diversity was started in Canada in the 2000s by corporations not government. Companies involved in supplier diversity in the U.S. – the Royal Bank of Canada (TSX:RY), Bank of Montreal (TSX:BMO) and Toyota Motor Corp. (NYSE:TM) and others – started to spread it to Canada, Pencak explained. Then, organizations such as WBE Canada were formed.

“For governments in Canada, it’s very difficult to build supplier diversity in the way the U.S. built it because U.S. had supplier diversity before negotiating trade agreements, but Canada negotiated trade agreements and now they are trying to bring in supplier diversity,” said Pencak.

She explained that according to the trade agreements Canada has with foreign countries, contracts for more than $100,000 have to be publicly posted and available, which prevents the Canadian government from building a supplier diversity policy that benefits certain Canadian businesses.

However, Pencak said, there are opportunities to champion diversity on contracts worth $100,000 and under.

“For a small business, even a $100,000 contract makes a difference. That is a fantastic starting project for a new startup company. It helps them survive a year, and then they can scale up and grow and take it to the next level and eventually we can make a multimillion-dollar company,” Pencak said.

“The storyline I use: You can give people fish, or you can teach them to fish, but where you see the magic happen is when you start buying the fish from them.”

Progress is taking place

Progress is taking place, albeit slowly, as Canadian companies and various levels of government build supplier diversity initiatives into operations.

The City of Toronto was one of the first Canadian governments to join the supplier diversity movement, according to Pencak, and one of their initiatives was to ensure that one of every three bids on a contract must be a diverse supplier from a rotating list of businesses.

“Traditionally, diverse suppliers would not be included in those invitations because they didn’t have connections, visibility or credibility,” she said, adding that invited diverse suppliers still need to compete with everybody else in the procurement process.

“For diverse suppliers, that is a massive win, because normally they wouldn’t be invited, but now they are at least invited, and they are learning how the process works.”

In 2019, the City of Vancouver implemented a Social Value Procurement Framework, which set a target to have half of the city’s spending and contracts involve social or diverse businesses.

Canadian companies such as BMO, Bell (TSX:BCE) and Telus Corp. (TSX:T) have incorporated supplier diversity plans into their operations, and actively track and report on their progress, according to Pencak.

Laslo-Baker said a supplier diversification policy is not only beneficial to suppliers, but to the businesses that implement it.

“Minority-owned businesses tend to offer very interesting, innovative products they may not be aware of. Because it’s more challenging [for us] to get into the marketplace, we have to be differentiated,” she said.

“There can be a lot of shoppers who are female, and they are often looking to buying from people and companies like themselves.” 

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