Entrepreneurism highly respected in Canada, but small business faces big challenges
By Daniel Kosir | July 25, 2011
Canadians realize the important role that small businesses play in the economy, and the high regard in which they hold entrepreneurs reflects this.
According to the Perspectives on Small Business in Canada survey, 94 per cent of Canadians said they admire entrepreneurs and 92 per cent would approve of their kids or immediate family members starting their own business.
The study, which was commissioned through the Angus Reid Forum by the Canadian Federation of Independent Business (CFIB), HP Canada and Intel Canada, is based on a survey of 1,160 small businesses and a separate general population survey of 2,028 adult Canadians.
Results from the survey show that small business was ranked as the second-most respected institution behind farmers, the majority of which tend to be small business owners themselves. Around 98 per cent of respondents said that small business is very important to Canada's future, and 95 per cent value the products, services and personal attention they get from small businesses.
The high amount of respect for small businesses is not surprising to some people. "Canadians realize the importance of small business and the strong impact they have on the economy," said Doug Bruce, VP of Research for the CFIB.
People also respect the strong contributions they make to their communities, according to the survey.
"Ninety-four per cent of Canadians agree that small business is vital to their community," said Bruce. "Providing employment locally, meeting the unique needs of the community, and donating goods and services are top ways they contribute."
Yet despite the high-esteem in which small businesses are held, the survey also indicates that entrepreneurship faces some major challenges. The majority (71 per cent) of Canadians feel that educational institutions don't put a strong enough emphasis on entrepreneurship as a career option. Furthermore, 83 per cent feel that unlike the public, governments actually undervalue entrepreneurs.
Respondents also sounded off on why they are not going into business for themselves, citing the following barriers:
- Lack of money (57 per cent);
- The amount of risk involved (40 per cent); and
- Uncertainty about success of the business (36 per cent).
Increased investment in technology good for long-term growth
Among the small businesses that participated in the survey, almost 70 per cent of those operating for ten years or less said they are planning to increase operations in the next three years.
Owners realize the importance of investing in technology to promote growth, with 43 per cent saying it would help their business achieve its overall goals. Of these respondents, 67 per cent believe that investment in technology would ultimately help them save time and money. Other perceived benefits from increased technology cited by survey participants included:
- Improving access to information (64 per cent);
- Remaining competitive (58 per cent); and
- Promoting innovation (48 per cent).
"The survey results really speak to the importance of investing in technology as part of a business' long-term growth strategy," said Elaine Mah, business marketing manager of Intel Canada. "Technology is being seen as a key enabler for innovation and productivity among small and medium-sized businesses."
Technology and competition
Canadian small businesses generally believe they are using technology more effectively than the competition, with 76 per cent stating they are using technology either at the same level or to a greater extent than their competitors, versus just 18 per cent who say they are using it to a lesser extent.
However, the survey found that the rate at which small businesses adopt new technologies is substantially less: only 17 per cent identify themselves as early adopters while almost half (47 per cent) believe they adopt the latest technologies around the same time as their competitors. Thirty per cent say that they are a bit later on the uptake than their competitors, waiting to understand how the market will respond before investing in new technologies.
"This is interesting when you consider that small businesses also revealed that their top operating challenge is competition, tied with regulation and paper burden at 39 per cent," said Leyland Brown, VP and GM of Personal Systems Group, HP Canada.
"We know that technology can give a small business a competitive advantage, and these results show us that the majority of small businesses feel they have taken steps to ensure they are using the right technology to address the competition."
Brown adds that while most small businesses may not perceive themselves as early adopters, the survey data indicates that they are relying on technology to give them an edge.
- 79 per cent of Canadians say the economy is powered by entrepreneurs
- 20 per cent of Canadians own or have owned a small business, and 46 per cent have considered it
- The top operating challenges for small businesses in Canada were competition, regulation and paper burden (39 per cent) followed by total tax burden (33 per cent).
The complete version of Perspectives on Small Business in Canada report can be accessed at the CFIB website.
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