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.”
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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
