Wed, April 24, 2024 at 9:35 AM EDT
Business
Statistics Canada study on Black-owned businesses suggests systemic challenges hold them back – CBC News
The number of Black-owned enterprises in Canada is growing, but still represent a tiny fraction of the country’s business landscape, and they tend to be smaller and less profitable than other businesses.
Those are some of the main takeaways from a recent Statistics Canada study that looked at the state of entrepreneurship among Black Canadians between 2001 and 2018.
The study amalgamated a series of different reports — including census data for 2001, 2006 and 2016; the 2011 National Household Survey and the 2018 Employer-Employee Dynamics Database — and analyzed them to see how the status for Black entrepreneurs has changed over the better part of two decades.
It found there were approximately 66,880 Black-owned businesses in Canada as of 2018; about 2.1 per cent of the more than 3.1 million businesses in total across the country.
According to the latest census data, 4.3 per cent of Canadians, or more than 1.5 million people, identify as Black.
Almost three-quarters of Black-owned businesses are owned by men, while the percentage of self-employment grew from 1.8 at the start of the study period to 3.5 per cent by 2018. That’s greater than the growth in self-employment among Black women, which went from 1.3 per cent to 2.2.
While Black-owned businesses are growing, the data suggests they are not meeting their full potential as they tend to be smaller and less profitable than other businesses.
More than 95 per cent of unincorporated Canadian businesses owned by Black people have fewer than one employee, and even among those that are large and complex enough to want to incorporate, more than 91 per cent have fewer than five.
“Black-owned businesses are almost half as likely as White-owned businesses to have five or more employees,” the study found.
They’re less lucrative, too. Among male business owners, Black men earned an average of $56,100. That’s $9,500 less than their counterparts from other racialized groups and $43,300 less than what average white male business owners earned in 2018. Black women business owners, meanwhile, earn the same as other racialized groups, but $16,000 less than white women.
Black-owned businesses tend to be less profitable, with profit margins averaging 8.5 per cent, versus 14.9 at white-owned firms. The study says that white-owned businesses tend to “have a better ability to profit from their activities and have more room to maneuver to cope with rising costs or competition,” but stops well short of suggesting any systemic disadvantages are solely to blame for that discrepancy.
Funding challenges
But Carlton-James Okaswe, a business professor at Mount Royal University, says the numbers clearly suggest there are systemic challenges holding Black-owned business from reaching their full potential.
“Black-owned enterprises … have a harder time getting bank loans … and even at what interest rates they might get,” he told CBC News. “That needs to be explored.”
In 2021, the federal government created the Black Entrepreneurship Loan Fund, a $265 million commitment to help entrepreneurs with loans of up to $250,000. Okaswe says programs like that and others are a step in the right direction, but he still hears from Black-owned businesses all the time who say their biggest challenge is funding.
Outside of conventional bank loans or government grants, a major funding source for small businesses is often what he calls “dealmakers” — entrepreneurs who grew businesses and now spend some of that capital to nurture the next generation.
“But these dealmakers tend to be Caucasians or white people in general, and so their networks will revolve around that,” he said. “It’s fair to say that the dealmaker network is something that Black people don’t have sufficient access to.”
Some solutions
Lola Adeyemi is one success story who managed to overcome those hurdles and build her dream business, but it wasn’t easy. After immigrating to Canada in 2005, she worked a variety of corporate jobs while longing to set out on her own in the food business. In 2018, she started It’s Souper, a soup company built on the flavours of her native Nigeria.
She launched her business from her own savings, but to scale up to the level where she can produce enough to get shelf space at major grocery chains, she needed money to survive. And the more she grew, the bigger those funding challenges got.
“The demands are pretty daunting and it starts immediately,” she said of the need for funding.
Two years after launching her business, she applied for and was awarded a $72,000 grant from law firm Cassels Brock, money she used to pivot to the new reality of selling in the pandemic: online. She later appeared on CBC’s Dragon’s Den seeking financing to help her manage her growth.
WATCH | It’s Souper appears on Dragon’s Den:
Lola Adeyemi from Toronto, ON, pitches her line of Nigerian inspired soups and sauces.
While she is grateful for the mentorship, funding and help she’s received along the way, Adeyemi says a major stumbling block for Black entrepreneurs is that lack of a community above them — to help them rise up.
“It’s a huge problem because you’re not seeing others who have done it, so you don’t think it’s doable,” she said. “What I tell a lot of people in the Black community is to expand beyond the Black community because we’re not yet at the point where we are in places of influence enough to be able to have an impact.”
It was nerve-wracking for Sydonne Warren to make a move like that, but it paid off for her small but growing business. An artist and muralist in Calgary, it was a chance encounter with an independent brewery in the city that led to a relationship that’s been helping both sides ever since. In 2020, the owners of Inner City Brewing contacted her about purchasing one of her designs to feature it on beer cans.
Next, they commissioned her to paint a mural in their space. So when she needed a space to host her “paint and sip” nights — where attendees can learn to paint, while sampling a few drinks — the bar was a natural fit.
Her experience is similar to many Black business owners, in that she didn’t start out with an obvious career path in mind, but she didn’t let that stop her.
“I didn’t know other business owners growing up so I’ve had to kind of do trial and error a lot to teach myself,” she said. “I think if we were probably more educated on how to run business and how to have a successful business, then I think we’d see the gap start to close.”
For more stories about the experiences of Black Canadians — from anti-Black racism to success stories within the Black community — check out Being Black in Canada, a CBC project Black Canadians can be proud of. You can read more stories here.
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Oil companies planning to ship crude on the expanded Trans Mountain pipeline in Canada are concerned that the project may not begin full service on May 1 but they would be nevertheless obligated to pay tolls from that date.
In a letter to the Canada Energy Regulator (CER), Suncor Energy and other shippers including BP and Marathon Petroleum have expressed doubts that Trans Mountain will start full service on May 1, as previously communicated, Reuters reports.
Trans Mountain Corporation, the government-owned entity that completed the pipeline construction, told Reuters in an email that line fill on the expanded pipeline would be completed in early May.
After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the company said early this month.
“The Commencement Date for commercial operation of the expanded system will be May 1, 2024. Trans Mountain anticipates providing service for all contracted volumes in the month of May,” Trans Mountain Corporation said in early April.
The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.
The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).
The expansion project has faced continuous delays over the years. In one of the latest roadblocks in December, the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.
The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.
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Tesla profits slump by more than a half
Tesla has announced its profits fell sharply in the first three months of the year to $1.13bn (£910m), compared with $2.51bn in 2023.
It caps a difficult period for the electric vehicle (EV) maker, which – faced with falling sales – has announced thousands of job cuts.
Boss Elon Musk remains bullish about its prospects, telling investors the launch of new models would be brought forward.
Its share price has risen but analysts say it continues to face significant challenges, including from lower-cost rivals.
The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.
Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts’ predictions of just over $22bn.
But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.
It did not reveal pricing details for the new vehicles.
However Mr Musk made clear he also grander ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – even going as far as to say considering it to be just a car company was the “wrong framework.”
“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.
Such sentiments have been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”
Some investors have called for the company to instead focus on releasing a lower price, mass-market EV.
However, Tesla has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.
It also said its situation was not unique.
“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” it said.
Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.
Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.
The cuts in Texas represent 12% of Tesla’s total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.
However, Mr Musk sought to downplay the move.
“Tesla has now created over 30,000 manufacturing jobs in California!” he said in a post on his social media platform X, formerly Twitter, on Tuesday.
Another 285 jobs will be lost in New York.
Tesla’s total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company’s filings with US regulators.
Musk’s salary
The car firm is also facing other issues, with a struggle over Mr Musk’s compensation still raging on.
On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which had been rejected by a Delaware judge.
The judge found Tesla’s directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.
Due to the fall in Tesla’s stock value, the compensation package is now estimated to be around $10bn less – but still greater than the GDP of many countries.
In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas – which Mr Musk called for after the judge rejected his payday.
Business
Stock market today: Nasdaq futures pop, Tesla surges after earnings with more heavyweights on deck
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Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.
The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.
Tesla shares jumped nearly 12% after the EV maker’s vow to speed up the launch of more affordable models eclipsed its quarterly earnings and revenue miss. That cheered up investors worried about growth amid a strategy shift to robotaxis and the planned cancellation of a cheaper model.
The results from the first “Magnificent Seven” to report have intensified the already high hopes for Big Tech earnings, that the megacaps can revive the rally in stocks they powered. The spotlight is now on Meta’s (META) report due after the market close, as the Facebook owner’s shares rose after the Senate voted for a potential ban on rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) next up on Thursday.
Meanwhile, Boeing (BA) reported better than expected first quarter results before the opening bell with a loss per share of $1.13, narrower than the $1.72 estimated by Wall Street. Shares rose about 2% in morning trade.
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