The Unsure Entrepreneur

Unsure Entrepreneur

SUMMARY KEYWORDS
entrepreneurs, canada, immigrants, business, bdc, newcomer, trends, immigrant entrepreneurs, canadian, entrepreneurship, challenges, provinces, productivity, canadian economy

SPEAKERS
Roger Pierce
Mathieu Galliot, Sylvie Ratté (BDC)

Intro 00:00
You're listening to the Unsure Entrepreneur podcast with Roger Pierce. Whether you're scribbling business ideas on a napkin or wrestling with the “should I shouldn't” I question, get ready to explore the realities, the risks and the rewards of entrepreneurship as we share the stories, scars and successes of small business owners.

Roger Pierce 00:23
Hello and welcome to another edition of the Unsure Entrepreneur podcast. My name is Roger Pierce, and I'm thrilled to be here today with you and introduce two very special guests.

Sylvie Ratté is a seasoned senior economist with over 22 years of experience at the Business Development Bank of Canada, specializing in economic research and analysis related to the performance of Canadian businesses with an educational background in economics from UQAM.

Mathieu Galliot is an experienced economist currently also working at BDC with a background in policy analysis, project management and teaching and economics and it with education from the University of British Columbia and HEC Montréal.

Welcome to both of you.

And today's show is about immigrant entrepreneurship in Canada. So excited to talk about this, because, as you're going to learn, listeners, entrepreneurship in Canada is on the rise, and these two wrote a fantastic article that appears on Bdc.ca providing all kinds of great insights and research into what's happening with immigrant entrepreneurship in Canada. So we're going to talk about it. Why this is important, how this is changing the landscape of Canadian entrepreneurs, and what we can do to support newcomers to this country, because, frankly, they're the one that's going to be driving a lot of the innovation and job creation and investment in this country down the road.

We're going to get to all that and unpack it and more. But for starters, folks, I wanted to read the article, a bit of the article that we're talking about here, because this is really the crux of our conversation today. So Bdc.ca, Business Development Bank Canada, is a Crown Corporation bank owned by the federal government. It's probably the most entrepreneur friendly bank out there. I've borrowed money before from the BDC. They're fantastic. We'll talk more about them later on, but they offer a lot of resources for entrepreneurs, and I encourage everyone to go and check it out at Bdc.ca

This article that Sylvie and Mathieu wrote says this: Immigrants make up an increasing proportion of Canada's population, with a country welcoming more immigrants each year, the immigrant population will continue to grow in the coming years. This will change the face of entrepreneurship in the country, since immigrants have a higher rate of entrepreneurship than non immigrants. I'm going to say that again, immigrants have a higher rate of entrepreneurship than non immigrants. Overall, 2.9% of the immigrant population age 15 and over are entrepreneurs in Canada, compared to 2% for non immigrants.

What will be the impact of historically high levels of immigration on the Canadian entrepreneurial landscape, and what challenges are these new immigrant entrepreneurs likely to meet once they create companies in Canada? This is what we want to discuss today. So let's begin Sylvie and Mathieu with reviewing some of the key highlights from the report. I'm going to get you to comment on probably the most prevalent on:. The report says that 34% of all entrepreneurs in Canada are immigrant entrepreneurs. Why is that significant?

Mathieu Galliot 03:31
What we did is we looked at the share of entrepreneurs across time, so from 2006 and we estimated all the way to 2034 and what we found is it's about a third of entrepreneurs are immigrants, which means that immigrants actually overrepresented among entrepreneurs as they represent one in four Canadians, but one in three entrepreneurs. What's interesting also think, is the difference between provinces. So because immigration is not equally across Canada, you have different province with different actually share of immigrants in the population and also in the entrepreneur. So what we found is, for example, in Ontario, you have 43%, actually 4 out of 10 entrepreneurs are immigrants. But in Quebec, is only about two out of 10. And you'll see, maybe we'll talk later about the forecast for the next 10 years, but you'll see it also evolves interestingly in the next 10 years as well.

Roger Pierce 04:26
Just for context, you also write in the report, in the USA it's 22% of entrepreneurs are immigrants, and the UK 19%, so Canada has a very higher proportion of entrepreneur immigrants here.

Mathieu Galliot 04:41
Interesting enough, because of the higher share of immigrants in the population in Canada compared to other countries. So I was saying Canada is about one in four people in Canada are immigrants in countries like the US, UK, France, is between 10 and 15% so naturally that leads to actually having more immigrants among entrepreneurs in Canada. As well compared to other developed countries. Actually, the other countries that we looked at with more immigrants is Australia, 30%,b ut most of the developed countries actually have way less immigrants in Canada as a share of the population.

Roger Pierce 05:13
Why do you think that is? Is that just our diversity and our acceptance of people?

Mathieu Galliot 05:19
I think it reflects different policies around around immigration, there was, like, a clear policy in Canada to have more immigrants in the country, because population is aging, there is a bit more tradition of welcoming immigrants in Canada for like, a really long time. So characteristic of Canada is, even if we look 10 or 20 years ago, the share of immigrants in the population was still pretty high. We've seen the report. It was 17% I think 16% in 1991 which is more than actually most developed countries today. Think the importance of immigration in Canada is not new, really, or has been important.

Roger Pierce 05:55
Well it's a great thing to see. And this is a trend, folks. It's not just frozen in time. This is going to improve, we're going to get even more entrepreneurs from other countries. And I think in your report, you said here, if I'm correct, in the next 10 years, 40% of all entrepreneurs will be immigrants. By 2034 half of all entrepreneurs in Ontario will be immigrants, and there'll be the majority of BC entrepreneurs.

Mathieu Galliot 06:19
Yes, exactly. So that's where we see interesting differences between provinces. You have about two places, Ontario in British Columbia, where roughly a majority, or about half of the entrepreneurs in 10 years will actually be immigrants, and you have other places in Canada, like the Atlantic provinces, where the share will be much lower. But what's interesting is, across all provinces, the share of immigrants among entrepreneurs actually increasing. It's just starting from different starting points.

Roger Pierce 06:46
We're going up across the board. Yes,

Sylvie Ratté 06:49
a lot of people don't realize that entrepreneurship overall is not increasing in Canada, but immigrant entrepreneur is really among the growing trends for entrepreneurship. And what's interesting, if I may add, is their contribution to job creation, innovation, intellectual property. We looked at the studies, and we've done some analysis, and what we notice is a new Canadians and new entrepreneurs from other countries are responsible for 25% on net job creation in Canada, compared to 17% for businesses in the private sector. The economic impact of immigrant entrepreneurs is significant, and like new businesses are naturally more innovative, and we observe that among immigrant owned businesses, they innovate more, they invest more in intellectual property. This is really good news for the Canadian economy.

Roger Pierce 07:51
It is, you're right. The economic investment, the cultural benefits, the connections to foreign lands, they bring all kinds of new products and services that we've never, never heard of before, which is great, which adds to our diversification, cultural enrichment. It's a win win win for Canada, isn't it? Now, Sylvie or Mathieu, I was going to ask you, you know the types of businesses that entrepreneurs are starting new Canadian entrepreneurs, I know one of them is restaurants and food services...any insights in the types of businesses that people are starting up?

Sylvie Ratté 08:23
They are in all kinds of industries, really... professional services...but there is a bit more businesses in what we call face to face businesses; retail, accommodation, food services, as you mentioned, they were a bit more impacted by Covid because they operate their businesses more in these industries. But really, nowadays, you find immigrant entrepreneurs in all industries.

Roger Pierce 08:52
Well, that's amazing. Yeah, I've got some stats here too. I dug up see if you've agree with these; percentage of immigrant business owners by industry, truck transportation, for example, 56% are newcomer entrepreneurs, grocery stores. I've got a friend who owns a chain of grocery stores from another country. Computer Systems, game and games and design. 51% are newcomer entrepreneurs, restaurants and food service, 50% like you mentioned Sylvie; data, processing, hosting, that's 40% dentists offices, 36%; software publishers, 30% -- the list goes on. You know, like you said, they're into all kinds of different industries, which is fantastic to see.

Sylvie Ratté 09:34
And they're very educated too. So that's really a plus for the Canadian economy.

Roger Pierce 09:39
Well, absolutely. Some of them have post secondary education and beyond, and they bring those skills over to Canada. And any sense of how many entrepreneurs in their homeland had a business there as well, like had previous business experience, any sense of that?

Sylvie Ratté 09:53
I'm not fully sure. I think some of them did have some experience, because. We there are programs for immigrant entrepreneurs or immigrants that want to invest in Canada, so we are proactive and attracting these kind of immigrants. So only one part of immigration and the challenges they face when they arrive here is the need to understand the rules of their new country, and they don't have credit history, and very often they need to start over, like as you mentioned, they are good at keeping links with their own countries. So they do more import / exports than entrepreneurs that are born in Canada with their country of origin, but at the same time, the many instances they need to start over, that could be a challenge.

Roger Pierce 10:48
Absolutely and maybe we'll parlay into some of the challenges and entrepreneurs have in just a minute. But I wanted to share something I dug up, just for fun, some of Canada's most famous immigrant entrepreneurs. You guys certainly probably know these folks, but listeners may not.

One guy, and I met him is Raptors Super Fan Nav Bhatia, owner of Nav Bhatia Hyundai dealership. You've probably seen him on TV. He goes to all the Raptors games. He came to Canada as an immigrant in the 80s with almost nothing, and now he owns several Hyundai dealerships. Super successful newcomer
entrepreneur.
Another famous one is Robert Herjavec. You probably know him as a nice dragon on the CBC show Dragon's Den, and now he's on Shark Tank in the US. He's originally from Croatia. He's a super successful Canadian entrepreneur.
And who else do I have here? Oh, yeah. Karim Hakimi, founder of Hakim optical. He's from Iran, he's become a thriving business tycoon here in Canada with his chain of optical stores, right?

So many examples to get to but time doesn't allow us, but entrepreneurs coming from different countries, they come here, they work hard, they leverage the resources they have, maybe from back home, and it's all good, good. Good news for Canada.

Sylvie, you mentioned a minute ago some of the challenges facing entrepreneurs. They're coming from other countries. Can you give us a sense of some of those challenges expand on that?

Sylvie Ratté 12:12
Yes, what we've seen through the statistics and the studies, some of them done by Statistics Canada, is that they have the same survival rate as Canadian businesses that are led by Canadian born person. That's a good news, but because they lead younger businesses, sometimes smaller businesses, they are a little bit more fragile financially. In the surveys that we're looking at, such as the business condition survey, they are. They seem less optimistic about the future, about their future, sales growth, the economy, the capacity to take on more debt, to invest in their business. They're preoccupied by high interest rates more than firms that are not led by immigrants. So and as I mentioned before, they received a bit more help from Canada when Covid hit. So in that sense, they are bit more fragile.

If you look at their access to financing, we don't see a big difference. I mean, aside from the fact that they need to build their credit history, so that could be a challenge. They seem to be able to access as much financing as they'd like to from traditional financial institution. But still, some operating sectors that are maybe more less attractive for traditional financial institutions, or because they are smaller, younger, that could be that can explain that they face more challenge, something that they need support for. They need support from organizations like BDC and others that help immigrant entrepreneurs.

Roger Pierce 13:54
On that note too. And Mathieu I'll get you to chime in too on the challenges. But a lot of banks, commercial banks, I know, are trying to get newcomer entrepreneurs to start banking with them before they even come over, right? So there's a bit of a banking history. Like you said, credit history being a big issue for a newcomer entrepreneur. So some banks are making it very easy for people who are planning to come to Canada. Hey, look, why don't you set up a deposit account now? So you've got a bit of a credit history. It makes it makes it easier to transfer the money over. I think that's a great thing to help people get their feet planted here firmly.

And BDC certainly does so much for entrepreneurs. And BDC has got flexible financing. It's got support and consulting services to help entrepreneurs. Certainly, the website is top notch. I love directing entrepreneurs to all the fantastic things you've got there — webinars, research papers, articles, tools, business templates, all kinds of great stuff. So fantastic resource for entrepreneurs.

Mathieu, can you speak to some of the other challenges that entrepreneurs are facing here coming from another country?

Mathieu Galliot 14:56
As Sylvie was saying, one of the top ones was really the lack of credit history, the credit score. So in some places, because I can, I'm an immigrant myself, so when I arrive in Canada, when you talked about that, let's say a credit score, you don't necessarily understand what it is, so you need a lot of resources to actually really understand what matters. How you build your credit score, how do you use your credit card? All this type of basic information that many people are born in Canada don't necessarily think of it as complex, but when you're really new in the country you know you need to get used to it. And the other aspect also is you don't necessarily have family support. If you don't have the family here, you don't necessarily own a home as well, so you might not use your home as an asset to start a business. You may have more issues with that.

Roger Pierce 15:47
Great insight. And I didn't know you're from another country where you originally from, from France. You know what you touched upon credit score, and that kind of speaks to navigating regulatory and legal frameworks. That's another challenge for newcomer entrepreneurs understanding our legal requirements, how the banking system works, tax codes, that's a whole bunch of stuff. I mean, new entrepreneurs have enough to deal with getting into business. Newcomer entrepreneurs have even more to deal with, because they've got to deal with all these things that are new to them, right? The other big barrier too is cultural language. Differences in language and cultural practices can impede communication and business operations. So not only do you have to learn how to run a business in Canada, you gotta be able to speak the language French or English. And these can be huge, huge challenges to overcome, can't they?

Sylvie Ratté 16:36
Oh yeah, totally. They need to speak two languages very often, 2,3,4, and, learn a fourth language sometimes, and like if we take Montreal, for instance, you need to master both French and English if you want to do business.

Roger Pierce 16:52
Where I live, Sylvie, downtown Toronto, I'm surrounded by a little Portugal and Little Italy, and I don't speak either of those languages.

Sylvie Ratté 17:01
Another thing that entrepreneurs, new entrepreneurs, or immigrant entrepreneurs, need to learn. You mentioned the tax code, the complexity. It's also the fact that Canada is not a centralized country. It's a very decentralized country, and each region, each province, is different from one another. They are trade barriers between provinces and the low density of population except close to the US border. So before coming to Canada, I'm sure most immigrants don't didn't see that. They thought Canada was a big market, like the US could be a big market, but that's not the reality at all. And the trade is really north south. Is not across provinces as much as north south. So that's another thing that languages you mentioned. But the capacity to expand your business and grow your business can be limited by this aspect. And when you're new to Canada, you don't know that reality from the beginning.

Roger Pierce 18:05
It's so true, you're right to point out the differences between the provinces and territories. I was on a podcast the other week, a US based business podcast. Shout out to the Small Business Edge podcast and Brian Moran, but he asked me, you know, what's the difference about doing business in Canada, and that's you raised another one right there. You know, it's very difficult sometimes for an entrepreneur to do trade across province or provincial barriers, and there's not a whole lot of cooperation. You're not dealing with one Canada entity. It's a whole bunch of multiple entities, isn't it?

Also another barrier too entrepreneurs have to overcome that are new in the country is just market knowledge, how we do things here. What's a "double double," if you don't know Tim Hortons, and you're coming a little example of, you know, I don't know what that is. You got to learn all this stuff as a newcomer entrepreneur. And so it can take time. And I know newcomers, they're in a hurry to get their businesses up and running so they can support their families, etc, but it's going to take time, and the more support we can give newcomers to get on their feet and to find their way around and learn what they need to learn, I think that's going to help them be successful over the long term.

So let's segue into, you know, some of the supports out there to help newcomer entrepreneurs, you folks probably have some. I've got a list to kick us off. I'll let you speak about BDC and its supports. But one of my favorite organizations is Futurpreneur Canada. They provide financing, mentoring and support tools to aspiring business owners age 18 to 39 including immigrant entrepreneurs. Another one of my favorites is Toronto Business Development Center, self centered plug for Toronto. They've got a program called Ontario's Soft Landing Program, and it's fairly new. I think it's a nine month startup incubation program that helps immigrant entrepreneurs relocate and grow in Ontario, powered by the Startup Visa. Can you maybe shed some light on the resources BDC brings to new Canadian entrepreneurs?

Sylvie Ratté 20:05
We have an entire micro site devoted to newcomers. So if you go on our web page, bdc.ca and you go right at the bottom, you can click on the link, "Newcomer entrepreneur," and then we have information in different languages, Arabic, Punjabi, simplified Chinese, traditional Chinese, Spanish, Tagalog, also, we give some insights on how to succeed as a newcomer entrepreneur, when you have little credit history, little knowledge of the local business environment and cultural and language barriers, as you mentioned, we also have financing from $25,000 to $50,000 that requires no credit history, that newcomer entrepreneurs can apply it. It's called the Newcomer Entrepreneur loan. You have to be in business for at least 12 months. I'll already generate some revenues, but the requirements are at the minimum. Really, all immigrants want to start a I've started a business and are less than I've been in Canada for less than three years. Can apply

Basically all our financing or advisory services are accessible to immigrant entrepreneurs, and as you mentioned on our website, we have a lot of free information. If someone is thinking about becoming an entrepreneur, there's a tool that is applicable to them. They can answer a survey, and it tells you, What score do you have? Do you score high as a future entrepreneur? You can assess your digital maturity, you can assess your productivity, you can benchmark your financial ratio. All that information is free on our website. You can do a business plan online.

So really, as you mentioned, BDC.ca website is very comprehensive for anyone who want to start or run, grow, sell a business, or buy a business. It's a good way to start a business -- to buy a Canadian an existing Canadian business. Half of Canadian entrepreneurs are more than 50 years old. So they're thinking of selling their business. So it could be and they, sometimes they don't have any one to sell their business to, it could be a real good way to start to become an entrepreneur in Canada that by buying a business so and we can facilitate with that, like we really have a large service offering on that regard. And we have partnerships with a lot of Canadian organizations that support immigrant entrepreneurs, as you mentioned, Futurpreneur. There's also the Community Futures and several several organizations across the country. Think we have close to 30 partnerships with other organizations that support entrepreneurs.

Roger Pierce 23:04
Wow. And of course, the annual Small Business Week is coming up third week of October. That's a week that BDC really dominates. I think you created that week, and it's a national celebration and spotlight on everything entrepreneurs, right? Yeah, which is fantastic.

Sylvie Ratté 23:17
Mathieu will be launching a new study for Small Business Week.

Mathieu Galliot 23:21
Yes, we are doing a study about the top trends that will affect businesses over the last couple of years, and we're going to help them, give them some advice on how to prepare to be ready for these different trends.

Roger Pierce 23:34
Can you give us a sneak peek? Mathieu, what's one of those big trends?

Mathieu Galliot 23:39
I don't know if I can give us a sneak peek of the trends. So the trends are basically about what concerned entrepreneurs. We did a survey. We asked them, What are the main concern for the next couple of years and what were the main concern in the past? And we kind of compared to see what kind of trends will accelerate and what trends will kind of decelerate. For example, we expect some new trends in terms of consumers use. So consumer trends, for example, because of the Gen Z, will be more important. We'll have very new way of consuming. We have new trends concerning, you know, cost of doing business is really important, it will still probably be an issue. We have also some trends around the technology we think technology adoption will become more and more important, probably more important than ever. We have also some other trend around the labour shortage. So we're going to talk about today labour shortage a little bit not as important they used to be. But we think that there is some structural issues and once the economy will restart, the structural issue is resurfaced, so that mill will we can expect back, some labor shortage to come back, really, and the next few years, if the economy restarts. So that's kind of sticky, because the different trends will cover.

Roger Pierce 24:46
So that's going to come out for Small Business Week. Nice. Okay, well, you've given me something to look forward to. I will watch for that. Maybe copy me in an email. I'll put it on the resources page, on Unsure Entrepreneur.com so everyone can see. It. I'm also going to put the BDC link you mentioned Sylvie in the show notes and elsewhere on our resources pages so people can get to it.

Part of our mission here is just to make people aware of the resources out there. One of the biggest challenge for entrepreneurs, Canadian or otherwise, are finding things that can help them. There's so many fantastic resources out there. I call it the Era of the Entrepreneur, because really, we've never had this amount of support before. You just got to be able to dig. And part of the challenge is finding that stuff. And we hope to make it a bit easier through this podcast.

Now in the article, you kind of close. I want to get your thoughts, maybe as parting thoughts here, both of you. You called it "entrepreneurial dynamism," which is a great term for immigrant entrepreneurs. It's great for the Canadian economy. I think we've established that we welcome newcomer entrepreneurs. But you pointed out something that I hadn't thought about, the share of entrepreneurs in Canada's population has been declining for two decades. That breaks my heart. This has likely contributed to Canada's sluggish productivity growth. "Entrepreneurial dynamism" of immigrants could probably help our economy become more innovative and dynamic. Can you expand on that?

Sylvie Ratté 26:12
There are many reasons why Canada is lagging with regard to productivity, and one of them is the decreasing proportion of new business entry, like startups. It decreased over the last 20 years. Part of it is due to the fact that the job market is very tight, so there are job opportunities. There's no need to start a business. But that has a negative impact on innovation, on competition, and therefore, on productivity. And as you know, productivity is key. We want to increase our standard of living. For entrepreneurs, it's key. If they want to increase the salaries and attract workers, they need to become more productive. So the fact that the growth of the Canadian population will come from immigrants -- most of the growth in the coming years -- the fact that they are more entrepreneurial, this will have a positive impact on entrepreneurship, on competition, innovation and productivity.

Roger Pierce 27:16
Well, said, it's so important. We need to embrace newcomer entrepreneurs. We need to help them. They're the future of entrepreneurship in this country, as you're saying, and could be part of the solution to our productivity problem.

Excellent topic. I could talk to you folks for hours, but unfortunately, that's all the time we have today. I want to thank you very much Sylvie and Mathieu for being here today to talk about this important subject. We've given the website a plug, but a reminder. Listeners, please visit www.bdc.ca to find out what the Business Development Bank can do for you and your business, new or established. I'll put the link to the immigration resources that Sylvie mentioned in the show notes, so it's really easy for you to find. And that's it for now. Thank you everyone for listening, and be sure to return for more insights from the Unsure Entrepreneur

Sylvie Ratté 28:08
Thank you for the invitation.

Roger Pierce 28:10
Nice to see you, folks. Take care.

Extro 28:13
That's it for this episode of The Unsure Entrepreneur podcast. Thanks for listening. Be sure to subscribe so you don't miss other candid conversations with small business owners, and be sure to check us out at unsureentrepreneur.com.