Study finds drop in Canadian entrepreneurs, decline slower in Prairies

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Canada has fewer entrepreneurs than it did 20 years ago though the decline has been slower in the Prairies, according to a report by the Business Development Bank of Canada (BDC).

We lost 100,000 entrepreneurs (in Canada), and in the Prairies we lost 8,000 entrepreneurs,” Pierre Cléroux, vice president of research and chief economist at BDC, told Postmedia in an interview. “So it represents 11 per cent less (in Canada). In the Prairies, it’s about five per cent less.”

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Cléroux said the younger population on the Prairies helps to explain the disparity.

“Typically, people start a business when they are between 25 and 45. …  In the Prairies, the population is not aging as in the rest of the country,” he said. “For example, in Canada, 19 per cent of Canadians are over 65. In Alberta, it’s 15 per cent who are over 65.”

In addition, Cléroux blamed inflation, high interest rates and complexities with the entrepreneurship business for the decline.

“If you want to borrow money to start a business, it’s more expensive. Also, the job market is really good. … So the incentive to take risks on your own to start a business is not as big, because you have other options,” he said.

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Meanwhile, professor of economics at the University of Alberta (U of A), Chetan Dave, told Postmedia “variable inflation can cause entrepreneurs to pull back on new projects.”

In general, this is not good for the economy.

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“(It) can negatively affect innovation if entrepreneurs do not see an incentive to bring their projects forward,” Dave said.

‘Solid ecosystem’ for entrepreneurs in Alberta 

Ishan Arora, an entrepreneur from Edmonton, said Alberta has a “solid ecosystem” for entrepreneurs. He was encouraged to start his own business this summer — a weekly podcast called The Inflection Point that talks about issues related to innovation and life’s ups and downs — when he started his undergrad program in finance at the U of A.

“You have a really solid ecosystem within Alberta when it comes to you bringing an idea to life. What I mean by that is, let’s say you want to start a company where you want to bridge the gap between students and employers, so that students can have a more seamless process to find a job. There are resources out there,” Arora said.

“We have the Entrepreneurship Hub at U of A. If you really have an idea, there is somebody who is willing to help you out.”

There is also a grant program to help entrepreneurs get started, an initiative started by the Alberta School of Business.

“If you have an idea, you can book a meeting with one of the program directors at U of A. You can share your idea with them. They’ll help you connect with few of the resources. And then we also do our own self, internal rounds of funding,” Arora said.

“So, they’ll give you around ($5,000 to $10,000) depending on how big of an idea and project you’re working on. And then from then on, they will also help you connect with other resources outside of university to help scale your idea.”

Arora said he’s constantly working on improving his entrepreneurial skills.

“We already have placements from 23 countries (for the podcast). … I got some funding from the bar business, and I have a studio on campus, but right now, it’s still in very early stages,” Arora said.

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Less innovation ‘worrisome’

Cléroux said the trend of fewer entrepreneurs is “worrisome” in how it might affect innovation.

“It’s a challenge because new business startups bring innovation to the market, so they bring new products, new services, new ways and more innovative ways of doing something. So if you don’t have as many startups, you don’t have as much innovation in your economy,” Cléroux said.

Doug Griffiths, CEO of the Edmonton Chamber of Commerce, told Postmedia in a statement that “entrepreneurs are the driving force behind innovation, economic growth and job creation.”

While “the pandemic really hit small businesses hard,” it is “crucial to support these entrepreneurs,” Griffiths said.

In Edmonton, the percentage of small businesses declined slightly from 94.7 per cent 94.5 per cent between 2021 and 2022, according to statistics on the Government of Alberta’s website.

The BDC’s study suggests developing four distinct skills for entrepreneurial success — people skills, leadership skills, marketing and finance skills and administration skills.

Cléroux recommended training in these areas for future entrepreneurs, and the study suggests that even personality skills can be learned.

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