A focus on soft skills, such as grit and leadership, could help reverse Canada’s declining number of entrepreneurs, according to a new report from the Business Development Bank of Canada.
BDC, a Crown corporation that lends to small and medium-sized businesses, conducted a study with researchers at the University of Montreal to look into why there are fewer Canadians launching businesses and what skills could be missing. The authors conducted surveys of entrepreneurs and aspiring entrepreneurs and analyzed Statistics Canada data.
The study estimates there are 100,000 fewer business owners than there were 20 years ago, and just 1.3 individuals out of 1,000 started a business in 2022, compared to three out of 1,000 in 2000.
Some demographic and economic factors are to blame for the decline, such as more than half of entrepreneurs being over the age of 50 and looking to retire, and a tight labour market in recent years making it more attractive for Canadians to get a job rather than start their own business.
However, there is another factor at play, the study suggests: attitude. Fourteen per cent of Canadians express interest in starting a business, according to BDC, about 10 times more than the number of those who actually do.
The number one skill that entrepreneurs and coaches who participated in the study said was key to success was what they called grit: the ability to identify solutions to problems, bounce back from failures, and manage stress.
“This is the most important skill you need as an entrepreneur,” said BDC chief economist Pierre Cléroux. “Not everybody has that, but what’s interesting is you can actually develop this.”
The study suggested the way to develop grit was to set clear, challenging goals; build a support network of mentors and peers; and to do regular healthy activities such as physical exercise and meditation.
Of other kinds of skills, BDC said marketing and finance skills were crucial at the startup phase of a company, but operational and leadership skills become more important as the size and complexity of an organization grow.
The survey data was collected online by the Angus Reid Institute in two waves in March: a 1,259-person sample of established small-business owners, and another 1,001-person sample of new or aspiring entrepreneurs. University of Montreal also surveyed 230 of its students in June. BDC conducted some in-depth interviews with experienced entrepreneur coaches to help interpret the results.
One of the entrepreneurs who participated in the study was Rob Bancroft. The 35-year-old recently took over as owner of Avante Manufacturing, a maker of point-of-purchase displays based in Okanagan Falls, B.C., and founded in 1989.
Mr. Bancroft took the plunge into entrepreneurship after years of working at a financial-technology company, where he helped retiring business owners direct their charitable giving.
He said he was interested in buying this business in part because it already had a strong team in place who were willing to stay under a new owner. And in a tight labour market, he knows he has to work hard as a leader to keep his staff happy.
“Being good for people is good business,” he said.
Mr. Cléroux said instilling a sense of entrepreneurship in the younger generation is an important, long-term economic concern that isn’t getting enough attention.
“We always focus on what the aging population means for health care or for the job market,” he said. “But we don’t focus very often on the fact there’s going to be quite a change in ownership as well.”