A. The statistical context

According to Industry Canada, the percentage of Canadian small businesses owned by persons younger than 30 years of age fell from 2.9% in 2004 to 2.8% in 2007, and to 1.6% in 2011. According to the Business Development Bank of Canada (BDC), in 2010, 38.5% of Canadian business owners stated that they had started their first business between the ages of 18 and 34, and 1.0% did so prior to turning age 18. Furthermore, BDC has indicated that, relative to their older counterparts, entrepreneurs aged 18 to 34 are significantly more driven to develop their business and are less likely to invest in innovation.

B. Federal supports

In addition to any provincial/territorial initiatives, the federal government supports entrepreneurs in various ways; some federal initiatives are targeted to those who are young. For example, the Canadian Youth Business Foundation provides financial support to entrepreneurs aged 18 to 39, as they are less likely than older entrepreneurs to be able to obtain financing on their own; for those who are able to do so, the financing is typically costly. The Foundation also pairs young entrepreneurs with experienced business owners who serve as mentors.

Moreover, both the BDC and the federal regional economic development agencies support entrepreneurs, either generally and/or with a specific focus on young entrepreneurs. For example, the BDC provides financing and management advice to entrepreneurs, and sponsors the BDC Young Entrepreneur Award. As well, FedNor’s Northern Ontario Youth Entrepreneurship Initiative and the Atlantic Canada Opportunities Agency’s Young Entrepreneur Development Initiative support young entrepreneurs, and Western Economic Diversification Canada and the Federal Economic Development Agency for Southern Ontario – through Community Futures Development Corporations – provide support to entrepreneurs, including those who are young.

C. Witnesses’ views on the challenges faced by youth entrepreneurs

The Committee’s witnesses identified a number of challenges that limit the extent to which youth are, or become, entrepreneurs. In particular, they mentioned the choice of entrepreneurship as a career, government programs that assist entrepreneurs, succession planning for retiring entrepreneurs and financial constraints.

1. Entrepreneurship as a Career

The Committee was informed that, at present, youth do not consider entrepreneurship as a career. For example, the Canadian Youth Business Foundation indicated that youth do not know that entrepreneurship is a viable career option. Moreover, the AFL-CIO said that, although a number of apprentices eventually start their own business in order to supply their services to third parties, a career in the “trades” is not seen as leading to entrepreneurship.

In its brief submitted to the Committee, the Association of Canadian Community Colleges noted that helping youth build the knowledge and skills required to start, expand and manage a business increases their “employability” as an entrepreneur.

2. Government Programs

The Canadian Youth Business Foundation told the Committee that young people are not aware of government programs designed to assist entrepreneurs and support entrepreneurship. Startup Canada made particular mention of small communities, suggesting that entrepreneurs may not know where they can access support services.

3. Succession Planning

The Canadian Youth Business Foundation informed the Committee that, according to the Canadian Federation of Independent Business, Canada is facing a “huge” challenge as 66% of small business owners will retire by 2016 and business succession planning is lacking. Similarly, Startup Canada commented on business succession planning as a major issue faced by retiring entrepreneurs.

4. Financial Constraints

In speaking to the Committee about student debt and entrepreneurship, the Canadian Federation of Students and the Fédération étudiante universitaire du Québec highlighted that students with high levels of debt are not willing to risk starting their own business. The Fédération étudiante universitaire du Québec shared the results of its 2009 survey that found that 45% of Quebec students who wish to start a business are unable to do so because of their student debt.

Finally, the Canadian Youth Business Foundation said that it is difficult for youth to obtain the financing that is needed to start a business.

D. Witnesses’ views on the solutions for youth entrepreneurs

The Committee’s witnesses identified a number of solutions designed to increase youth entrepreneurship in Canada. In particular, they mentioned government support for entrepreneurs, business skills training for youth, accelerators and incubators to assist small businesses, and access to capital.

1. Government Financial and Non-Financial Support

The Canada Youth Business Foundation suggested the creation of a single federal government resource to assist the “entrepreneurial community” in accessing the numerous government programs that are available. It also called for increased government promotion of existing entrepreneurship programs. Similarly, Startup Canada proposed the creation of an umbrella organization to “connect” the various government programs that support entrepreneurs.

As well, Startup Canada supported investments designed to encourage women, and especially young women, to become successful entrepreneurs.

2. Business Skills Training

A number of witnesses mentioned the need for additional entrepreneurial training for youth, whether to establish a business or to manage a business acquired through succession.

The Association of Canadian Community Colleges called for a pilot project to enhance the development and delivery of entrepreneurship training by post-secondary institutions. In its view, the pilot project could support the sharing of best practices among Canadian post-secondary institutions with a view to fostering a culture of entrepreneurship and encouraging more youth to become entrepreneurs. Youth Employment Services, in its brief to the Committee, suggested assistance for business skills training to help youth start a business; this assistance would include access to mentors with individualized coaching. Moreover, in its brief submitted to the Committee, the Association of Universities and Colleges of Canada requested that governments enhance experiential learning opportunities, such as entrepreneurial programs.

Startup Canada noted that entrepreneurs would like youth to be better equipped with the skills and networks needed to continue to expand the companies that they acquire through business succession planning by retiring entrepreneurs.

3. Accelerators and Incubators

In commenting on specific programs that assist entrepreneurs and early-stage businesses, Startup Canada supported the Canada Accelerator and Incubator Program and any measure that fosters an entrepreneurial culture in Canada. In noting that accelerators have the potential to cultivate the next generation of entrepreneurs and can create “collisions of innovation” among youth, it requested the creation of a nationwide peer network of entrepreneurs on campuses that would be connected to the Canada Accelerator and Incubator Program.

4. Access to Capital

In its brief submitted to the Committee, Youth Employment Services called for increased access to micro loans and for financial management training.