Canadian Small Business: The Unsung Economic Heroes

The entrepreneurs behind small business face many challenges.The entrepreneurs behind small business are the unsung heroes of the Canadian economy. From owner-operated house cleaners and handymen, to family run convenience stores and restaurants, we interact with these types of companies on a daily basis, yet they never get the publicity – or credit for the country’s economic success – that banks, oil companies, cellphone operators and other corporate giants do.

“Small businesses and entrepreneurs generate the big ideas that drive innovation and growth,” says Colleen McMorrow, Ernst & Young’s Canadian Leader of Entrepreneurial Services. “They take risks that help create jobs and generate wealth. They push the economy forward. And they invest in communities across the country.”
So who are these entrepreneurial types and what drives them to take those risks?

It’s a Lifestyle Choice

According to a recent market research report published by the CIBC titled “Start-ups – Present and Future,” more than 500,000 Canadians are in the process of launching a new business. Given our relatively healthy economy and low unemployment rate (7.4 percent as of September 2012), CIBC concludes that most of those people have chosen to start those new companies, rather than having been forced to do so because no other option exists.

The Be-Your-Own-Boss Boom

The fastest growing segment of new entrepreneurs is in the baby boomer crowd, accounting for nearly one-third of the sector. Why? Many of them, having put in years in a particular industry, have built up enough expertise and contacts to start their own consultancy and be their own boss. Others, with the financial security of a paid-off mortgage and built-up savings, are finally taking the opportunity to pursue their dream job.
Regardless of age, the ranks of the educated self-starters is also growing, up to just over 30 percent of all owners, which is about five percentage points higher than the general workforce.

The Benefits Self Employment

As a university educated, self-employed individual I know from first-hand experience (I’ve been a freelance writer and editor for the bulk of my 15-year career) some of the benefits of being your own boss: most days, my commute consists of making my way from my coffee machine to my computer; I can schedule appointments and deal with chores like shopping during the day when most other people are stuck at the office; and, as a parent, I know I never have to ask for permission to attend one of my kids’ school functions, or stay home with them when they’re sick.

Added Job Security

From a financial perspective, I’ve often said that I have more job security than my peers working full-time for a newspaper or magazine. How? If one of the publications I work for suddenly goes out of business, I lose a client. But I still have many others, and can buffer the loss while I seek out a replacement. But if your one-and-only employer goes belly up, you need to scramble to find a replacement fast.

And, much as it does in my line of work, technology – most notably high-speed internet access and all-pervasive cellphone coverage – makes it easy to set up a virtual office from which you can operate myriad types of online businesses: e-retailing, graphic design, providing local services (like dog walking or being a personal valet), IT consulting, recruiting…the list goes on.

The Downside: A Matter of Survival

Of course, it’s not all roses. Less than half of all new start-up businesses survive their first five years. Many fail because they weren’t based on a solid business plan to begin with, or the owner decides the self-employed lifestyle simply doesn’t suit them. It’s tough getting any business going, often with lots of long hours, and the uncertainty of knowing where the next job or client will come from.

Pro Tip: Startup costs can add up quickly, and can really rack up your business credit card. Take action by making balance payoff a priority, and choose a card with cash back options to help mitigate your costs. The MBNA Rewards MasterCard will give you a boost with 1000 points on your first purchase, and will pay you back one cash back point on the dollar. You’ll also be gifted with 1000 points on your sign up anniversary annually.

The Ultimate Accountability

Aside from that cash-flow instability, there are other financial drawbacks, including the fact that there are no paid vacations (if you’re not working, you’re not making money), and most self-employed people aren’t eligible for employment insurance or maternity benefits. That said, unless circumstances forced me to, I couldn’t imagine changing my work lifestyle.
The secret to launching any successful new business is to do your market research, develop a solid business plan, and test the waters as much as you can, long before you commit to a career change.

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