When James Lynn lost his job early in the COVID-19 pandemic, he decided to pursue his dream of becoming an entrepreneur.
It hasn’t been easy.
“You know, entrepreneurship is like being in a maze, where you know where you want to go but you’re not exactly sure how to get there,” he said. “And there’s a ton of pitfalls.”
Lynn is the founder of Kalū, an independent pet food-maker in Montreal. He leads a team of three, selling online and in 20 shops across Quebec, with plans to expand into Ontario next year.
He makes cat and dog food, but as an entrepreneur, Lynn’s an increasingly rare bird.
In a new report, the Business Development Bank of Canada (BDC) examined numbers from Statistics Canada and found that the country has 100,000 fewer entrepreneurs than it did 20 years ago — despite the fact that the population has grown by more than 10 million over the same period.
The Crown corporation says the decline puts the economy in danger, and it worked with researchers from the Université de Montréal to analyze the problem and what’s causing it, and to consider solutions. Its recommendation: Some of the difficulties of entrepreneurship can be overcome by helping business owners develop “soft skills,” such as grit, marketing and how to interact with people.
BDC, a financial institution for entrepreneurs that provides loans for small and medium-sized businesses, released the report for Small Business Week.
Why entrepreneurship is down
For its report, BDC defined an entrepreneur as a self-employed worker who hires employees to support their venture.
“Twenty years ago, there was three Canadians in 1,000 every year becoming an entrepreneur,” Pierre Cléroux, BDC’s chief economist, told CBC News. “Now we’re down to about one for every 1,000 people.”
The actual figure is 1.3 people for every 1,000, less than half the rate of two decades ago.
Pierre Cléroux, chief economist at the Business Development Bank of Canada, speaks to entrepreneurs this week at the Université de Montréal. He says the entrepreneurship decline ‘simply can’t be ignored,’ because new businesses are responsible for ‘almost all net new job creation in this country.’ (Université de Montréal)
It’s also far below the apparent public interest in entrepreneurship.
The popularity of TV shows like Dragons’ Den, the growth of college and university entrepreneurship programs, and the creation of business incubators for entrepreneurs across Canada all suggest the appeal of starting a business.
A report by Global Entrepreneurship Monitor says 14 per cent of Canada’s population has entrepreneurial aspirations; so there seems to be plenty of dreamers. Yet BDC says few of those dreamers are becoming doers for several reasons:
People in their late 20s to early 40s are the most likely to start businesses, but that demographic is shrinking with Canada’s aging population, leaving a smaller pool of candidates as potential founders.
Low unemployment and high wages mean fewer people feel the need to start a new business.
Business owners and would-be entrepreneurs face a barrage of discouraging factors, such as labour shortages, inflation, technological change and the increasing domination of large companies.
Why it matters
Cléroux said the entrepreneurship decline “simply can’t be ignored,” because new businesses are responsible for “almost all net new job creation in this country.”
He said that “in any healthy economy, you need a good percentage of startups” to bring new products and services to market and “force mature businesses to do better.”
Sarah Lubik, director of entrepreneurship at the Beedie School of Business at Simon Fraser University in Vancouver, agrees.
Sarah Lubik, director of entrepreneurship at the Beedie School of Business at Simon Fraser University, says she would like to see scholarships for entrepreneurship at colleges and universities as a way to cultivate young business founders. (Beedie School of Business, Simon Fraser University )
“There’s so much at stake,” Lubik said, focusing especially on entrepreneurs’ role in creating breakthrough technologies.
“If you’re not having entrepreneurship to take those ideas forward, then we’re not going to get those ideas that we need to save the world.”
A ‘soft skills’ solution to overcome tough problems
Another problem identified in the report is that a third of entrepreneurial ventures that do open close within just five years.
So what can be done to help more people get started as entrepreneurs and succeed? BDC recommends a focus on developing “soft skills” to help entrepreneurs through every stage of business.
Based on a survey of 1,250 entrepreneurs, it says marketing and finance skills are key to help a business get started, while administration and operations skills are needed to keep it going, and leadership and people skills are essential to create growth.
Relationship skills and grit — the ability to deal with stress, handle change and overcome setbacks — stood out as important in every stage of business.
The BDC report stresses that key skills are not innate personality characteristics, but traits and behaviours that can be learned through coaching and mentorship, reading, formal classes and engagement with peers.
Dominic Lim, an associate professor of entrepreneurship at Western University’s Ivey Business School in London, Ont., says successful entrepreneurs evolve and learn to cover for weaknesses.
Dominic Lim, an associate professor of entrepreneurship at Western University’s Ivey Business School, says he hopes that entrepreneurs from older demographics will emerge and contribute their skills and resources. (Ivey Business School, Western University )
“You almost see how these people can reinvent themselves throughout the process,” he said, “or sometimes they involve other people who can complement them.”
But James Lynn, the founder of Kalū, said he isn’t so sure the all-important grit can be taught.
“It needs to be within you,” he said. “There’s too many points where it’s easy and tempting to give up.”
What else might help?
At an event in Toronto for Small Business Week on Thursday, Rechie Valdez, the federal minister of small business, said a “full solution” is needed to ensure entrepreneurs feel there’s “an actual possibility for them to grow and thrive.”
To help cultivate young business founders, Simon Fraser University’s Lubik said she would like to see scholarships for entrepreneurship at colleges and universities — just as there are for academics and athletics.
Rechie Valdez, right, the federal minister of small business, speaks with Shopify president Harley Finkelstein at an event in Toronto on Thursday marking Small Business Week. (Shopify )
Lim agrees education is crucial.
He also points out that “hyper growth” startups have a new role to play and that the scale of companies like Wealthsimple, Shopify and Aritzia can offset some of the decline in entrepreneur numbers.
Lim said he hopes that entrepreneurs from older demographics will emerge as an offset, because they have skills and resources that could be “a blessing for the entrepreneurial ecosystem.”
But enticing some of those workers to become entrepreneurs like Lynn will be a challenge so long as the labour market is strong.
“I wish sometimes that I would have chosen to just taken a regular job and gotten a regular paycheque,” he said, “but I snap out of it after five minutes and I keep going.”
Indigenous entrepreneurs get a boost at Soar conference
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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
