The next 10 years will see a wave of Canadian start-up activity unlike anything the country has seen before, says a new report by CIBC.
The report, titled Start-ups: Present and Future, says that as of June, more than half a million Canadians were in the process of starting their own businesses. That's a number that rings true to George Hunter, CEO of Small Business BC, a resource center for small business entrepreneurs. "The last few years we've been in a trend that's really favoured small business formation."
British Columbia leads the provinces in terms of start-up activity, according to the report, with 3.9% of its working population being part of a start up, defined by CIBC as companies operating for less than two years. (Alberta and Saskatchewan rank second and third, respectively.) Hunter says BC sees about 4500 small business registrations each month, and about 55,000 in the last year.
The report also highlights some interesting difference between start-up entrepreneurs and their more established counterparts. A majority of today's start-up founders (80%) choose entrepreneurship rather than being "forced" into it by a slow job market, as was common in the 1990s. One in three has a university degree, double the rate seen in 1990. Start-ups are often seen as the domain of the young, but the report notes that 30% of today's start-up founders are age 50 and above.
While many of these start-ups will fail, the report estimates half will survive their first five years, meaning a net creation of 150,000 new businesses over the next decade. "We think the numbers could be even greater with skills building amongst people who have the fire in their bellies to start a small business," says Hunter, who advocates that fledgling entrepreneurs tap resources like his organization to find the help they need.
All entrepreneurs, regardless of the age of their business, will face big changes in the coming years, says Benjamin Tal, a CIBC economist and author of the report. To find success and encourage growth, small businesses will need to adapt to technology, serve an aging population and think and act globally to stay competitive.
"Small businesses have to be flexible enough to see where the wind moves. That's the difference between small businesses and large corporations. If you aren't flexible enough, you'll lose all of your advantages," says Tal.
The full report is available at http://research.cibcwm.com/economic_public/download/if_2012-0925.pdf