Every year, more Canadians are starting a business and it’s easy to see why. Being an entrepreneur allows one to take control of their professional lives, build something meaningful and if things break right, be profitable. But success as an entrepreneur is far from a guarantee. It takes sacrifice, hard work, and a willingness to fail. These efforts, however, have resulted in entrepreneurship being foundational to the Canadian economy, driving job creation and innovation across the nation.
With more people choosing to strike out on their own, the national economy is becoming increasingly reliant on ensuring the success of entrepreneurs despite it being as risky as ever. The economic role that entrepreneurship plays in Canada falls into two categories: the current state of the Canadian entrepreneurial sector and how it is contributing to economic growth.
Who Is the Canadian Entrepreneur?
Before delving into the state of affairs regarding Canadian entrepreneurs, it’s important to understand who we’re talking about. While entrepreneurs’ range in demographics, there are some interesting insights about the current crop that are impacting the economy.
In 2022, Startup Canada conducted a census and received responses from 115 cities across the country. Some of the findings from this census shed light on who makes up the sector, including:
- 45 per cent of entrepreneurs are from the Gen Z and Millennial generations.
- Those identifying as women made up 67 per cent of respondents.
- Close to 70 per cent are currently working as entrepreneurs. This means they are past the ideation stage.
Unfortunately, a high percentage of entrepreneurs never get too far in the process. For the sector’s continued growth, aspiring entrepreneurs need to turn an idea into a small business. To this point, Startup Canada’s census also found that 42.3 per cent of respondents have been entrepreneurs for one to three years and over 65 percent forecast that their annual revenue growth will range from $200,000 to over $5,000,000 in the next two to three years. This is promising for the current national state of entrepreneurship and provides a positive outlook for the future.
To get a better idea of what type of Canadians are foregoing job security in favour of the allure of entrepreneurship, consider that entrepreneurs are rather diverse (27 per cent were born outside of Canada and 27.5 per cent belong to a visible minority). This diversity is key to the future of Canada’s entrepreneurial excellence.
There are areas where Canada can improve. For instance, only 12 per cent of entrepreneurs identify as having a disability and only 2 percent of venture funding went to Black-led businesses. Each government level needs to improve the ecosystem and create better support. This can be done through tax incentives and easier access to grants, business incubators and mentorship programs.
The State of Entrepreneurship in Canada
Let’s begin with the obvious, the COVID-19 pandemic created a barrage of hurdles for Canadian entrepreneurs to jump over, including disrupting the supply chain and raising the price of many raw materials.
Entrepreneurs are still positioned as huge economic drivers despite the challenges and pitfalls they face under the current economic conditions. These conditions are forcing many small businesses to take on more debt than before while dealing with the typical bureaucratic red tape and labour shortages.
Despite everything, entrepreneurs in Canada seem to be rolling along. According to the Global Entrepreneurship Monitor, Canadian entrepreneurship has increased by more than 50 percent over the last decade. This statistic provides a glimpse into why Canada ranks highly in the Global Innovation Index, placing 15th out of 132 countries in 2022.
The Contributions of Entrepreneurs to the Canadian Economy
There are approximately 3.5 million entrepreneurs in Canada. This means that entrepreneurs are greatly contributing to Canada’s economic stability and growth. Furthermore, Canada is reliant on entrepreneurs to be job creators—a significant and indisputable contribution.
According to a report by the Innovation Economy Council, entrepreneurs act as a major catalyst for the national economy. Between 2014 and 2019, 35.8 percent of Canada’s net employment growth was created by small businesses. Since entrepreneurship and small businesses go hand in hand, it’s worth noting that over 68 percent of employment in the private sector is attributed to small businesses creating over 150,000 jobs annually. It’s tough to imagine what Canada would do without this type of growth year over year.
How Is Canada Helping its Entrepreneurs?
The Canadian government has helped build an ecosystem where entrepreneurs can thrive, but only to an extent. For instance, there’s the Canadian Business Growth Fund, which provides capital to support companies, in addition to a variety of loan and grant programs and tax incentives. These are all designed to help finance and guide entrepreneurs through hiring, training, research and development, expansion, and the adoption of necessary technologies. Of course, each small business must be either approved for funding or accepted into a program—neither of which is a guarantee.
It would be advisable for the provincial and federal levels of government to make a more substantial investment in entrepreneurs. An investment can take on many forms, but easier access to programs and more funding options would be a start. This can be followed up by tax credits and incentives if a small business meets certain key performance indicators such as crossing revenue and job creation thresholds.
Canada’s Continued Reliance on Entrepreneurship
Without the continued prosperity and perseverance of entrepreneurs, Canada’s economic growth would be capped and stagnant. Small businesses led by entrepreneurs diversify the country’s economic portfolio, and shoulder much of the weight when it comes to economic growth.
It’s fair to gloat about the current state of Canadian entrepreneurs, and its contribution to the Canadian economy can’t be exaggerated. Still, this is something that no Canadian or politician should take for granted. Canada’s economy is reliant on entrepreneurs and will continue to be for the foreseeable future. To nurture and evolve the ecosystem to ensure its survival and expedite its growth would be an investment in Canada’s economic future.
Rob Shapiro | Contributing Writer