As Canada’s population continues to age, immigration will play an increasingly important role in the creation of new businesses but it won’t be the only solution.
A recent study released by the Fraser Institute suggests that the demographic shift towards an older population is already dragging down the number of new businesses starting in Canada.
According to Jason Clemens, executive vice-president of the Fraser Institute and co-author of the report, “There’s an inevitable headwind against entrepreneurship, which is this demographic change.”
The report, based on data from Statistics Canada, found that in 2004 there were 17.9 new firms for every 100 existing businesses. By 2012, that number had dropped to 15. This decline correlates with a 15 percent increase in the proportion of Canadians over age 65.
According to Statscan, in 2009 there were 120 children for every 100 seniors in Canada. The federal statistics agency forecasts that those numbers will become equal sometime between this year and 2021.
The demographic shift, which is trending to as few as 58 children for every 100 seniors by 2036, will have a major impact on the Canadian economy.
While the decline in the number of new businesses will mean less job creation in the short-term, Mr. Clemens says that if nothing is done about the demographic shift, Canada’s future could be at risk. He warns that with a shrinking proportion of the population paying taxes, provinces will struggle to cover growing healthcare costs while also continuing to fund other services.
According to Michael Bloom, vice-president of Industry and Business Strategy at the Conference Board of Canada, Immigration will also play an increasingly prominent role.
“In order for us to be able to project economic growth at a desirable level, in the long-term, we must raise immigration to one percent annual inflow by 2025 to 2030,” Mr. Bloom says.
Canada currently accepts around 250,000 immigrants a year, an annual inflow of around 0.7 per cent of the population.
Immigration is not only important to maintaining economic growth, it’s also important to maintaining entrepreneurship rates.
Immigrants are 1.6 times more likely to start businesses than native-born Canadians according to a report released by the Business Development Bank of Canada in the fall.
Federal programs that were intended to encourage entrepreneurs and investors to immigrate to Canada stopped accepting applications in 2012 and were scrapped in June 2014. The federal government said the programs were ineffective at bringing new money into Canada and creating new businesses.
A new startup visa program, launched as a pilot project and intended to lure high-tech entrepreneurs to Canada, has only issued a handful of visas in two years.
Canada needs to dramatically increase the number of young immigrants it accepts, he says, and even if it is mathematically possible, there would be practical challenges.
For Mr. Clemens, other policies need to change to encourage entrepreneurship and investment by both new and native-born Canadians. One policy change he’d like to see is the scrapping of the capital gains tax.
“It’s low cost,” he says. “The federal government doesn’t collect all that much revenue from the capital gains tax.”
Attorney Colin Singer Commentary
The Conservative government has a stated distaste for business immigrants. Despite having a dubious history in this area, it recently launched an unsuccessful venture capital investor pilot project. The Citizenship and Immigration Ministry under former Minister Jason Kenney allowed more than 15,000 wealthy investor applications to languish in an unmanaged backlog, some dating back to 2008, before extinguishing their applications in 2014. The record is clear that the current government has adopted a series of policies that have significantly reduced the flow of business immigration to Canada.
It has been proven time and again that a bottoms-up community-led entrepreneurship can yield far better results than expressly-designed innovation ecosystems that claim to stimulate innovation and business drive. The Canadian government has been spending a lot in the latter, overlooking the important role grassroots community entrepreneurs could play today.
A fine example of community entrepreneurship is offered by Edmonton, where five years ago Startup Edmonton was initiated to bring together technical entrepreneurs in the community. Regular meet-ups, demo camps and startup weekends were part of this process, which ultimately gained enough seed funding from businessmen to acquire a 14,000 sq ft space of an old warehouse, which now holds up to 150 events every year, attended by 170 community members and 50 companies.
The reason behind the success of Edmonton’s startup community was because it had grassroots entrepreneurs in the lead, along with the support of its local government. For startups to succeed, it is important to focus on the community in every town and city, despite the widely held belief that high-growth start-ups are dependent on venture capitalists’ investment, incubator programs, and availability of people with exceptional talent and ambition.
Investing in a community is not so complex. Community meet-ups are easier to organize with some free food and drinks and a good place to gather. The government can boost these initiatives by funding staff to aid entrepreneur-led community groups. The amount of money that is spent on national conferences every year would do more good if it is invested in mobilizing community entrepreneurs. Funding can also be redirected to pay for company founders’ travel to connect with international communities. Even if 10% of what the government invests in “innovation ecosystem” is instead put for the development of community entrepreneurship, it can achieve wonders for Canada.
The Startup Canada Communities project is a step in the right direction. The project takes a much needed bottoms-up approach by mobilizing community leaders and providing them with necessary resources, shared tools, and mentorship to build and scale their start-up communities one by one.
Source: Financial Post
The Canadian economy is staging a revival after the Great Recession. During the Recession, some brave individuals launched their own ventures.
Eric Morse and Paul Woodford, leaders of QuantumShift, Canada’s premier executive development leadership program and network of entrepreneurs, interviewed 400 individuals. They asked them what they wished they had known and done from the outset, when starting their own ventures.
- Keep Learning: According to Wally Budgell, president of Robertson Bright Inc., devoting time to constant learning and self-improvement was significant.
- Remember the Basics: Adam Hill, CEO of LGM Financial Services, felt focusing on the basics (e.g. an effective business plan and a competent management team) was important.
- Keep Everyone on the Same Page: According to Frederic Boulanger, CEO of Macadamian Technologies Inc., ensuring that everyone was on the same page facilitated faster understanding of organisational goals.
- Follow Your Intuitive Instincts: Roberta MacGilivray, president of B.G.E Service & Supply Ltd., felt that listening to your gut instincts could be crucial.
- Instil a Common Culture Among the Workforce: Richard Stacey, president and CEO of Northern Response (International) Ltd., felt that a common mission and a set of values helped in creating a committed and engaged workforce.
- Hire Right: According to Karen Richardson, president of Freeze-Dry Foods Limited, hiring right helped you get the right people.
- Find a Mentor: L.T. Hilworth, CEO of Maple Farm Equipment Partnership, believes that finding supportive peers and mentors could help you wade through difficult waters.
- Prompt Action: According to Michael Going, co-founder of Good Earth Coffeehouse, moving smart and moving fast help you take advantage of opportunities faster.
- Customer Satisfaction: Vik Khanna, CEO of Khanna Enterprises Inc., believes that focusing on customer satisfaction always bred success.
- Evaluate the Opportunity Thoroughly: For Will Andrew, president of Trimark Sportswear Group, avoiding linking finances to make an opportunity a reality could yield hidden returns.
Entrepreneurs are strong indicators of the economy’s well-being. They follow innovative approaches, boost healthy competition and create employment opportunities. These tips could help the new entrepreneurs follow their examples.
Source: The Globe and Mail