The entrepreneurial boom is coming: CIBC
A new report suggests more Canadians are choosing to start their own businesses, not because they're forced too.
TORONTO—More than 500,000 entrepreneurs are in the process of establishing their own businesses, boosting the pace at which Canadians will become their own bosses in the coming decade, according to a report from CIBC.
“Irreversible structural forces suggest that the next decade might see the strongest start-up activity in the Canadian economy on record,” says Benjamin Tal, deputy chief economist at CIBC. “Small business friendly demographic trends are among those forces that are likely to support a net creation of 150,000 new businesses in Canada in the coming ten years.”
The report suggests:
- Only 20% of new business owners are doing so because they can’t find a job;
- The 50 and over age group is the fastest growing entrepreneurial segment, accounting for nearly 30% of start-ups;
- The self-employed are more educated – a third have a university degree;
- 70% of new businesses are started by men, but women tend to be more successful;
- Educational services (up almost 65% since 2007) and health care are growing fastest (up almost 20%);
- BC leads the country with start-ups, representing 3.,9% of the employed population.
The report also says the sector will be defined by:
- Increased export orientation: Half the revenues derived by businesses 2-5 years old are coming from outside Canada.
- Increased connectivity: Technology is increasingly leading to a higher level of cooperation between small business, self-employed and larger firms. Larger firms are calling upon the specific expertise of smaller enterprises to complete projects. This kind of cluster of competencies and strategic alliances will be temporary and at the end of a particular project they will dissolve and may not cooperate again.
- Growth in outsourcing: “Canadian small businesses are in a co-evolutionary relationship with corporate business in the economic landscape. Small businesses are needed by large corporations to create the necessary reach and depth into local markets as distributors and agents for products and services,” says Tal.
- Increased demand for personalized products: An aging population means growing sophistication and a rapid change in consumer tastes. This is positive for self-employment as small scale operations are flexible and can support increased demand for personalized services given their ability to focus on niche markets.
- Immigration: “The pace of growth in self-employment among immigrants has risen dramatically over the past two decades,” he adds. “Currently close to 20% of self-employed are immigrants, more than double the rate observed in the 1980s. Given that immigration will become an even more significant source of labour market growth, this trend is likely to support small business formation.”