Aboriginal business owners growing in numbers, businesses experiencing growth and profitability

New research findings from the Canadian Council for Aboriginal Business: Aboriginal Business Survey:

TORONTO, April 5 /CNW/ - The first in depth research in a decade shows Aboriginal small business owners across Canada are growing in numbers and experiencing wide spread success in terms of profitability and growth but also in ways that go beyond the bottom line. And, despite the challenges of business ownership, 70 percent of Aboriginal business owners are clearly optimistic about future revenue growth.

The number of Aboriginal business owners and entrepreneurs is growing at five times the rate of self-employed Canadians overall.  According to CCAB's research, titled Promise and Prosperity: The Aboriginal Business Survey, (www.ccab.com/new_research). Aboriginal businesses are diverse, and are not limited to any one region, industry sector, or market.

With the last comprehensive study of Aboriginal businesses conducted by Statistics Canada and Aboriginal Business Canada in 2002, CCAB embarked upon the 2011 Aboriginal Business Survey (ABS) to close this knowledge gap, and contribute to the understanding of the opportunities and challenges faced by Aboriginal businesses. The report is a timely exploration - based on telephone interviews with 1,095 First Nations, Métis and Inuit small business owners - of their goals and strategies, and the key factors that contribute to their growth.

In releasing the research Clint Davis, CCAB CEO said: "The results of the Aboriginal Business Survey shatter the myth that Aboriginal people are a drain on Canadian taxpayers.  The majority of Aboriginal businesses are profitable and are experiencing stability or growth.  Many Aboriginal businesses are hiring and training other Aboriginal people.  Overall Aboriginal business owners see themselves as successful and are positive about the future."

Key Findings

The number of Aboriginal business owners and entrepreneurs is growing at a rate that far exceeds that of self-employed Canadians overall.

  • The 2006 Census reported more than 37,000 self-employed Aboriginal people in Canada, up from just over 27,000 in 2001 - an increase of 38 percent. During this time period, the rate of growth of self-employed Aboriginal people was five times that of self-employed Canadians overall (7%).

Aboriginal businesses are diverse, and are not limited to any one region, industry sector, or market.

  • Aboriginal entrepreneurs have built their businesses across the range of industries. They are well established in construction (18%) and primary sectors (agriculture, forestry, fishing and hunting, mining, and oil and gas extraction; 13%). Yet, just as many operate in knowledge and service-based sectors, such as education, scientific and technical services, or health and social services (28%).
  • Self-employed Aboriginal people can be found in all parts of the country, with the highest concentrations in Ontario (23%), British Columbia (22%) and Alberta (18%) followed by Quebec (10%), Manitoba (10%), Saskatchewan (8%), the Atlantic provinces (5%) and the Territories (3%).

Aboriginal small business owners are succeeding, in terms of profitability and growth but also in ways that go beyond the bottom line.

  • Aboriginal entrepreneurs are realizing business success. Six in ten (61%) Aboriginal businesses report profits for 2010. As well, one-third (35%) achieved increased revenues for 2009-2010, despite the lingering effects of the recent economic downturn. Sales remained stable for 37% of business owners surveyed.
  • These positive financial numbers only tell part of the story. Half (49%) of Aboriginal small business owners consider their business a success, not only because of profits and/or growth, but because they are doing work that is personally rewarding, and have a steady client base. By comparison, only one in ten report that their business has not been successful.

Successful Aboriginal small businesses are distinguished by their use of annual business plans and innovation.

  • Only a minority of Aboriginal small businesses had a formal business plan in place the previous year, but this is more common among the most successful businesses (33% vs. 19% among the low-success firms).
  • One hallmark of successful Aboriginal small businesses is their use of innovation. These businesses are more than twice as likely as the low-success group to have introduced new products or services, or new processes, in the past three years.

Aboriginal small businesses create jobs for Aboriginal and non-Aboriginal people alike.

  • The majority (63%) of Aboriginal small businesses are very small, with no employees. Almost four in ten (37%) Aboriginal entrepreneurs have at least one paid employee, which is consistent with Canadian entrepreneurs generally.
  • Aboriginal businesses provide an important source of employment for other Aboriginal peoples. The large majority (86%) of Aboriginal businesses with employees employ at least one Aboriginal person.

Aboriginal entrepreneurs rely primarily on their own resources for both start-up and ongoing financing, and access to financing is considered one obstacle to growth.

  • To start a business, Aboriginal entrepreneurs rely most heavily on personal savings (55%), compared with business loans or bank credit (17%), credit from government programs (17%), or loans from Aboriginal lending institutions (15%). Personal savings are similarly the primary financing source for start-up small- and medium-sized enterprises (SMEs) across Canada.
  • Aboriginal small business owners consider access to financing, and access to equity or capital to be obstacles to their growth plans (respondents rated these two issues are rated as obstacles by 43% and 38%, respectively).

Despite the challenges of small business ownership, there is widespread confidence about the future.

  • Nationally, seven in ten (71%) Aboriginal businesses anticipate revenue growth in the next two years. This is consistent with the degree of optimism expressed by Canadian SMEs generally. Seven in ten say it very likely that they will still be running their business five years from now.

Report Recommendations

The Report contains broad recommendations for the consideration of financial institutions, government, Aboriginal entrepreneurs, and organizations with the interest and capacity to work with Aboriginal Businesses in order for more Aboriginal businesses to achieve success.

  • Improve access to capital for Aboriginal businesses.
  • The creation of provincial and municipal Aboriginal procurement strategies
  • Business planning by Aboriginal Business Owners is a critical success factor.
  • Building stronger networks will lead to sharing of expertise and knowledge among and between Aboriginal businesses.

What's Next?

Later this spring, CCAB will also release the findings from a unique and complementary survey of 50 Chief Executive Officers of Aboriginal economic development corporations (EDCs). EDCs are the economic and business development arm of a First Nation, Métis or Inuit government, and an important dimension of the Aboriginal business community. CCAB will release the results of the EDC survey in May 2011.

Methodology

The results of the 2011 ABS are based on a telephone survey conducted with a representative sample of 1,095 self-identified First Nation (on- and off-reserve), Métis and Inuit small business owners (defined as those with 100 employees or less) between September 10 and November 19, 2010. Environics Research Group, one of Canada's leading public opinion research firms and the organization, which conducted the Urban Aboriginal Peoples Study on behalf of the Environics Institute, conducted the research. Information from the 2006 Census was used to establish quotas of Aboriginal entrepreneurs based on identity group, region, business type and size. A Research Advisory Board of recognized experts guided the design and interpretation of the 2011 ABS from the private sector and government.

The full report including an executive summary is available at www.ccab.com.

The Aboriginal Business Survey is possible through the support of Indian and Northern Affairs Canada, IBM Canada Ltd., RBC Royal Bank and the Canadian Education and Research Institute for Counselling (CERIC).  CCAB also recognizes the support of First Air.

SOURCE The Canadian Council for Aboriginal Business

For further information:

For more info, to arrange interviews, and explore coverage opportunities:
Claire M. Tallarico, 416 616 9940 (mobile), ccab@rogers.com, twitter: @torcello

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