World beaters for startups
Canada is one of the best countries among the G20 for small business owners, but there is still plenty of room for improvement, especially as the country will need to lean on younger entrepreneurs coming out of the current recession, Ernst & Young said in a new business barometer released Monday.
The study, prepared for the G20 Young Entrepreneurs Summit in Nice, France, that starts Monday, surveyed 1,000 entrepreneurs across the G20 (50 in each country).
It found Canada is among the leaders in several areas, including business confidence, startup costs, strong banking sector, and good coaching and education programs for young entrepreneurs.
“There is only one G20 country – Canada – that can claim that high levels of confidence among entrepreneurs in their country are reflected in a similarly high number of new businesses registered,” the authors of the study said. “For all other countries there are significant opportunities for improvement on one or both of these key measures.”
Canada was also named the top entrepreneurial hotbed of all the G20 countries by a wide margin in a recent report from McKinsey & Co. prepared for the G20 YE summit.
With a score of 93, Canada easily bested the United States, which followed at 75, because of its protective and fluid environment for entrepreneurs, high quality of education, lack of taxes and regulatory burdens, and opportunities for collaboration.
“Entrepreneurs have a key role to play in fostering Canada’s growth, creating jobs and cultivating innovation and prosperity. It is heartening to see that Canada’s forward strides are being recognized globally,” Vivian Prokop, chief executive with the Canadian Youth Business Foundation who also worked with the research firm in the study, said in a news release.
The Ernst & Young study was also flattering for Canada, reporting that more than 70% of Canadian entrepreneurs surveyed were confident in their own country, by far the highest figure. Canada also averages almost nine new businesses registered for every 1,000 people in a given year, a close second behind the United Kingdom at just more than nine.
Part of the reason for this is a well-established culture of entrepreneurship, with 88% of Canadians saying the country’s culture encourages making your own way in life. This is third behind only India and China.
Canada also leads in startup costs and ease of registry as it only takes one procedure and on average five days to start a business, while the average cost comes in at only 0.4% of per capita income.
“Canada does sound like the startup paradise for G20 counterparts,” the report said, citing BizPal as an important online government service that simplifies the permitting and licensing process for entrepreneurs.
BizPal is a website that summarizes and provides access to applications for all the permits and licences that a business requires to get off the ground, although the service has come under some criticism for not being available in all municipalities, and for occasionally having outdated and inaccurate information.
As for funding, 52% of Canadian respondents said they had easy access to funding, compared with only 36% across the G20. However, 38% of Canadians said bank lending funding had deteriorated, and 50% said access to venture capital had worsened.
“Since both of these funding instruments are important at the early stages of enterprise development, entrepreneurs in Canada hoping to start a business may be facing worse conditions than in the past,” the report said.
Results are also unclear on access to other funding, including initial public offerings, private equity and the stock market, but public aid was viewed by the majority as being a key source in the next three years.
Canada also ranked high in terms of education, with 72% of Canadian respondents seeing an improvement in coaching programs in the past five years, and 50% calling for coaching as the No. 1 priority in the next three years to improve student perception of entrepreneurship.
Overall, the findings are encouraging for Canada but more work needs to be done to emphasize entrepreneurship to young Canadians, Colleen McMorrow, Ernst & Young’s Canadian leader of entrepreneurial services, said in an interview.
“Helping to encourage entrepreneurship education is important, access to mentors, helping students identify opportunities and entrepreneurship as a viable career,” she said.
This will be crucial for the health of Canada’s economy moving forward, as an entire generation of young Canadians just entering the job market now will realize that getting rejected for a job interview is not the end of the world – and that a single good idea, more than ever, can be moulded and marketed into a viable business.
“It’s not easier to be an entrepreneur, but the job security in more traditional paths has evaporated,” said Brian Anderson, an assistant professor of entrepreneurship with the Richard Ivey School of Business.
“Also many more parents are seeing it’s not feasible to tell their kids to go out and get that perfect job, because they themselves are seeing the same volatility.”
The Ernst & Young study will be released annually to coincide with each G20 summit and is meant to help G20 countries better determine their entrepreneurship policy and strategies.
Financial Post |