New entrepreneurial activity stuck near recession lows - BDC launches first annual Index of New Entrepreneurial Activity

2000 to 2011 Trend in new entrepreneurial activity in Canada (CNW Group/BUSINESS DEVELOPMENT BANK OF CANADA)

Study Highlights

  • Entrepreneurial activity in Canada has not recovered from the impact of the recession. Only 0.23% of the Canadian workforce started a new business that hired employees in 2011-far less than before the recession and the second-lowest rate in 12 years.
  • Ontario, British Columbia and Quebec have seen slight to modest recoveries in entrepreneurial activity since the recession, but the Prairies and the Atlantic provinces are still struggling with a significant and continuing decline in entrepreneurship. British Columbia is the most entrepreneurial province in the country, even post-recession.
  • Canadians aged 45 and up have dived into entrepreneurship. Those aged 45 to 54 have seen their index shoot up from 0.18% in 2008 to 0.27% last year, while people 55 years old and more have gone from 0.09% in 2008 to 0.17% in 2011.
  • Immigrants are highly entrepreneurial, with 0.35% starting new businesses that created jobs in 2011-nearly double the 0.20% rate of non-immigrants.

MONTREAL, Oct. 2, 2012 /CNW Telbec/ - Canadians remain reluctant to start new businesses, with new entrepreneurial activity still barely above the worst levels seen during the recession, according to a new study by the Business Development Bank of Canada (BDC).

Slightly over 43,000 Canadians started a new business that hired employees in 2011—or 0.23% of the almost 19-million-strong Canadian workforce.  That's only a slight increase from the 2009 recession low point of 0.22%. Last year's rate was also well below the 2005 pre-recession high of 0.30%.

The study is the first to use BDC's newly created Index of New Entrepreneurial Activity ("The BDC Index"), which measures the rate at which Canadians are launching new job-creating business ventures across the country. The study will be prepared annually by BDC's Research and Market Intelligence group.

"This study is important because it gives us our first health check-up for Canadian entrepreneurship," says Pierre Cléroux, BDC's Vice President, Research and Chief Economist. "The slow economic recovery appears to have discouraged risk-taking on new business ventures. This is a concern because entrepreneurship is an indicator of economic dynamism, creates jobs and drives innovation."

BDC's study also found:

  • The BDC Index is still at a much lower level than before the recession at 0.23%.
  • British Columbia, Quebec and Ontario have seen the country's best recovery in entrepreneurship, with a BDC Index in 2011 of 0.27%, 0.23% and 0.22% respectively.
  • The Prairies and Atlantic provinces are still struggling to reverse their declines in new entrepreneurial activity. In 2011, the BDC Index for the Prairies stood at 0.22%—an all-time low. In the Atlantic region, the BDC Index was 0.23% in 2011, tied with the region's previous all-time worst year in 2007.
  • Entrepreneurship has started to recover in three of the six industry sectors studied. Recoveries have occurred in the trade sector (0.21% in 2011); health care and social assistance (0.24% in 2011); and professional services (0.38% in 2011).
  • Construction, the sector with the highest rate of entrepreneurship, has yet to rebound, though there are signs the decline may be over. The sector had an index of 0.49% in 2010 and 2011, down from 0.62% in 2008. Two other sectors continue to decline: accommodation and food services (with an index of 0.42% in 2011), as well as manufacturing from a high of 0.10% in 2009.
  • Canadian women are far less likely than men to start a new job-creating business, with 0.14% of women doing so last year—less than half of the 0.31% rate for men.
  • Canadians aged 25 to 44 were the most likely age group to start a new business with employees in 2011, with a BDC Index of 0.28%. But that figure has declined sharply since peaking at 0.40% in 2006. Meanwhile, the baby-boomers aged 45 to 54 have seen their index shoot up from 0.18% in 2008 to 0.27% last year, while people 55 years old and more have gone from 0.09% in 2008 to 0.17% in 2011.

"We expected the level of new entrepreneurial activity to be stronger because the fundamentals of the Canadian economy are solid; there are still many opportunities to be mined out there," added Mr. Cléroux.

For detailed study findings consult BDC's "Analysis and research" section.

About the BDC Index of New Entrepreneurial Activity ("The BDC Index")
The BDC Index of New Entrepreneurial Activity ("The BDC Index") was developed to measure the rate at which Canadians are launching new job-creating businesses nationally, regionally and in various subpopulations and to provide a baseline for future trends. It provides current information on where the greatest entrepreneurial dynamism resides in the country, and the characteristics of new entrepreneurs.  The BDC Index is calculated by measuring the number of people who became independent workers with employees in the past 12 months as a portion of the total labour force, using Statistics Canada's monthly Labour Force Survey.

About BDC
Canada's business development bank, BDC puts entrepreneurs first. With almost 2,000 employees and more than 100 business centres across the country, BDC offers financing, subordinate financing, venture capital, securitization and consulting services to more than 28,000 small and medium-sized companies. Their success is vital to Canada's economic prosperity. www.bdc.ca

Image with caption: "2000 to 2011 Trend in new entrepreneurial activity in Canada (CNW Group/BUSINESS DEVELOPMENT BANK OF CANADA)". Image available at: http://photos.newswire.ca/images/download/20121002_C3316_PHOTO_EN_18728.jpg

SOURCE: BUSINESS DEVELOPMENT BANK OF CANADA

For further information:

Maria Constantinescu
Senior Advisor, Public Relations
BDC
(514) 496-7146
maria.constantinescu@bdc.ca