Entrepreneurs in Canada are getting harder to find than an apartment for under $2,000.
Driving the news: There are 100,000 fewer business owners today in Canada than 20 years ago, with the rate of people choosing to start businesses down by more than half. With fewer small business openings, the rate of self-employment is notably down as well.
There are a few reasons entrepreneurship is less trendy these days…
- Job market: A worker-friendly labour market and increased flexibility from hybrid work options have made settling down with a 9-to-5 paycheque more attractive.
- Cost of living: At the same time, high inflation has cut into consumer spending. Starting a business when everyone is sitting on their wallets is a massive risk.
- Retirements: As Boomers have begun to retire, more businesses have closed, with over 75% of small biz owners planning to exit their companies in the next ten years.
- Lack of financing: 12% of business loans from Canadian banks are extended to small and medium businesses, compared to the OECD average of 44%.
Why it matters: It’s not that Canadians don’t want to start or own a business — the BDC found 14% of Canadians are interested in starting a business, while a 2021 RBC poll found 55% of Canadians aspire to own one — it’s just that the environment isn’t conducive to it.
Bottom line: Small biz is vital for our GDP. If business growth continues to slow, Canada could prove the OECD right to be the decade’s worst-performing advanced economy.—QH