1.0 Introduction (cont'd)

1.1 Women’s Entrepreneurship in Canada

The significance of the contribution of Canadian women entrepreneurs to the Canadian economy was first recognized in 1996 in the groundbreaking study Myths and Realities: The Economic Power of Women-Led Firms in Canada⁶. The research revealed that at that time there were over 700,000 women-led firms in Canada, providing 1.7 million jobs. It also revealed that the number of women-led firms was increasing at twice the national average. Along with the launch of Myths and Realities, other significant events throughout the 1990s raised the profile of women entrepreneurs and increased government recognition that women entrepreneurs faced gender-specific barriers in starting and growing their businesses.

The trend towards the rapid growth of self-employment in Canada is continuing, with self employment having grown faster in the past 25 years than paid employment⁷. For women, since 1976, the average annual growth rate of self-employment has been 5.3%, compared with 2.2% for men⁸, meaning that women entered into self-employment twice as fast as men during the same period. This ratio increased even further recently with the number of women entrepreneurs growing by 8% between 1996 and 2001, compared with a 0.6% increase for men⁹.

Overall, between 1981 and 2001, the number of women entrepreneurs in Canada actually increased 208%, compared with a 38% increase for men¹⁰. By 2002, one-third of self-employed Canadians were women¹¹ and women in Canada now make up a larger share of the self-employed than in any other country¹².

The research also shows that women tend to own firms in slower growth and higher risk sectors, such as retail and service, in which access to financing is known to be more challenging for businesses to obtain¹³. At the same time, women are not restricted to these traditional areas and are increasingly moving into other sectors of enterprise. For example, in 2000, women held at least 50% ownership in 31% of knowledge-based industry firms and 31% of manufacturing firms¹⁴.

In 1998, Canadian women owned approximately 35% of Canada’s Small and Medium Sized Enterprises (SMEs). As of 2000, this figure had increased to 45%¹⁵. By 2002, there were more than 821,000 women entrepreneurs in Canada¹⁶ who contribute in excess of $18.109 billion to the Canadian economy every year¹⁷.

Due to its historic importance as well as its relevance for the subject of this evaluation, the following section outlines in brief the mandate and findings of the Prime Minister’s Task Force on Women Entrepreneurs. Another important recent study – Best Practices for Women Entrepreneurs in Canada, May 2004 - is also referenced in the following section as background to the evaluation.

1.1.1 The Prime Minister’s Task Force on Women Entrepreneurs 2003

In recognition of the growing impact of women entrepreneurs in Canada, the Prime Minister established the first ever Task Force on Women Entrepreneurs in 2002. This initiative included public and online consultations with all stakeholders across the country, including women entrepreneurs, associations, government agencies and departments at all levels, financial institutions and members of Parliament.

The mandate of the Task Force was to:

Examine the unique challenges faced by women-owned businesses by considering the factors required to encourage women’s entrepreneurship, assessing existing resources, identifying gaps and areas for possible future action, and evaluating best international practices and their appropriateness to the Canadian context; and
Provide advice to the federal government on broad policy issues in women’s entrepreneurship, both domestic and international and to make suggestions for specific initiatives that the government should consider, such as research and trade.

Barriers and challenges still exist for women in starting or growing a business¹⁸. While not every woman entrepreneur experiences all, or perhaps any, of these barriers or challenges, so long as they do exist, the Task Force report stated that Canadian public policy must reflect and address them.

The Task Force focused on three premises in carrying out its mandate:

Women entrepreneurs are the fastest-growing sector in our economy;
Women entrepreneurs face unique challenges and barriers to success; and
Facilitating the growth of women’s entrepreneurship is integral to Canada’s small business strategy.

The Task Force made 77 specific recommendations to the Canadian public sector, intended to reflect the necessity of giving greater focus to women entrepreneurs as an important component of Canada’s economic development. The recommendations also identified necessary changes as to how women entrepreneurs are treated in order to maximize their economic potential. The Task Force recommendations identified a need for:

Increased access to capital, information and government programs;
More in-depth research on all economic aspects relating to women entrepreneurs;
Increased access to government procurement;
Increased access social safety net programs, including childcare and maternity/paternity benefits;
More mentoring programs, networking opportunities, and business skills training;
Increased promotion of women entrepreneurs and entrepreneurship, both nationally and internationally;
Policy and program supports to encourage women entrepreneurs to export and to train them to be “export ready”;
Canada to actively participate in international fora to promote women entrepreneurs, such as the OECD;
A voice and a “one-stop shopping” portal for women entrepreneurs;
A re-evaluation of the service sector; and,
The annunciation of a new vision and appreciation of self-employment.

The Task Force report stated that there is still a huge need for support services and programs specifically geared to women entrepreneurs. The federal government was identified as playing an essential role in ensuring that the needs of women entrepreneurs are addressed, without which a significant segment of the Canadian economy will be left underdeveloped. It quoted data from the OECD and the World Bank confirming that countries with an active women’s entrepreneurial community enjoy a higher standard of living and are better places to live.

A specific recommendation of relevance to this evaluation was that the Federal government should establish Women’s Business Centres throughout Canada modeled on the Women’s Enterprise Initiative centres supported by Western Economic Diversification Canada. These centres should build on and partner with existing resources. The report also recommended that the federal government should ensure that the Women’s Enterprise Initiative centres (through Western Economic Diversification Canada) are maintained and provided with long-term support. Special attention must also be given to ensure access to financing and services is available to Aboriginal women.

1.1.1.1 Response to the Task Force

On October 29, 2003, The Right Honourable Jean Chrétien, Prime Minister of Canada, received and applauded the report from the Prime Minister’s Task Force on Women Entrepreneurs and thanked the members of the Task Force for their commitment and dedication. The Prime Minister pledged an immediate response to the following areas of concern highlighted in the report¹⁹.

The federal government will extend the Women’s Enterprise Initiative funded by Western Economic Diversification Canada.
The federal government will commit to multi-year funding for the Women in Business Initiative in Atlantic Canada.
The federal government will create two new Women Enterprise Centres in Ontario and Quebec. The federal government will instruct Industry Canada to work with women entrepreneurs on the issue of micro lending in these centres.
The federal government will organize a national Women’s Economic Forum to extend the work of the Task Force.
The federal government will also, for the first time, create a Canadian Women’s Innovation Award. As part of the Canadian Woman Entrepreneur of the Year Awards, this new Innovation Award will help raise the profile of women entrepreneurs and encourage young women to guide their own careers.
The federal government will expand its research and publications program to better meet the needs of women entrepreneurs and the federal government will ensure that this program provides policymakers with information about emerging issues.
The federal government will be raising entrepreneurship in future federal-provincial and territorial meetings so that all levels of government are aware of the concerns of women entrepreneurs.
The federal government will continue its focus on Aboriginal women entrepreneurs to identify their needs. The government will be developing a business planning guide to help Aboriginal women break into new markets.
The Prime Minister will ask the National Aboriginal Economic Development Board to examine the situation that Aboriginal women face in the field of entrepreneurship.
To provide Canadian women entrepreneurs with opportunities to expand their markets beyond our borders, the federal government will ensure that women entrepreneurs continue to be represented in Canada’s trade promotion activities and on trade missions.

In addition, the Contracts Canada seminar program for small businesses managed by PWGSC has established a seminar program especially aimed at women entrepreneurs designed to enhance their knowledge about, and ability to access, federal procurement opportunities.

Amongst the measures contained in Budget 2004, delivered on March 23, 2004 were several recommendations from the Prime Minister’s Task Force on Women entrepreneurs²⁰. For example, Budget 2004 pledged an additional $150 million over the next two years to accelerate implementation of the Multilateral Framework on Early Learning and Child Care. This commitment is virtually identical to Recommendation 4.04 of the Task Force and will provide up to 48,000 new child care spaces. In the area of support for small businesses, the government introduced a number of measures, such as an increase of $270 million of venture capital through the Business Development Bank and the Farm Credit Corporation, increasing small business access to R&D tax credits, easing tax rules for start-up businesses, and expanding accessibility to government tendering for smaller enterprises, and bolstering the usefulness and reach of Community Futures organizations and other instruments of regional development and diversification. These measures closely mirror Task Force recommendations in Sections 1, 3, 5, 8 and 9 of the Task Force report.

1.1.2 Best Practices for Women Entrepreneurs in Canada²¹

In May of 2004, the Foundation of Canadian Women Entrepreneurs in partnership with the Business Development Bank of Canada released a report on the Best Practices for Women Entrepreneurs in Canada. This report is an update of an earlier report tabled at the 2000 OECD meeting on women entrepreneurs. It highlights best practices from the public, private, non-profit and academic sectors for programs designed to support the establishment and growth of women-owned businesses in Canada.

Best Practices for Women Entrepreneurs in Canada, May 2004²², states that although women’s SME's offer a diverse range of goods and services, they still share many common characteristics in terms of their business approaches, strategies and operations that are gender-based in nature. From this perspective, there are two ways to approach support for women-owned businesses:

Integrate them in the more general sectoral approaches that already exist. These tend to be organized around the strategies and approach more commonly found in men’s enterprises; or
Treat women’s enterprises as a distinct economic cluster that has its own characteristics and patterns of economic growth that need to be taken into account to maximize their contribution to the national economy.

Research shows that the gender specific characteristics exhibited by women’s SMEs as an economic cluster include the following²³. Women entrepreneurs:

Have a strong commitment to their local community, particularly in terms of sourcing and employment;
Perceive themselves to be at the centre of their business organization with teams and working groups emanating from that central position, rather than develop rigid hierarchical structures in which they are positioned at the top;
Have a strong commitment to a vision that encompasses their private and business lives. This means that they constantly strive to develop sustainable business with manageable growth rather than aiming for immediate high growth and overtrading;
Focus upon the personal relationship aspects of business contacts, which supports long-term ambitions, (which include high turnover and profitability);
Develop contacts through active networking, which they perceive as a rich business resource; and,
Grow their business through a range of relationship alliances that frequently enable the creation of more businesses and trade. This results in the slower growth of women-run businesses, as measured traditionally by increased number of employees, but it also generally fosters much more sustainable growth²⁴.

Other key factors²⁵ that define women’s enterprises as an economic cluster include:

Women still face a degree of gender discrimination in the business community that goes beyond the traditional challenges facing all SMEs in terms of gaining access to credit, information, training, markets and technology;
Women’s dual role as business owners and as the primary family caregiver means that they generally have less time to devote to training and related activities needed to maintain the competitiveness of their businesses; and,
Women whose businesses are at the relatively early stages of development generally respond best to receiving advice and mentoring from other women entrepreneurs.

Research conducted for the report on Best Practices for Women Entrepreneurs in Canada found that banks continue to assess risk primarily on the basis of whether or not the potential borrower has assets that can be used to provide collateral for loans as well as on an assessment of past credit behaviour. Figures indicated that Canadian women still have significantly fewer assets than men and depending on whether they have withdrawn from the labour force to attend to other family matters, including working without wages in a family business, their lack of a recent borrowing record can also lead to a negative assessment of their ability to repay a business loan. The report stated that many women therefore use expensive forms of credit (such as credit cards) to start and support their businesses.

⁶ Myths and Realities. Bank of Montreal Institute for Small Business. December 1996
⁷ ibid
⁸ ibid
⁹ 1981-2001 Census of Canada, Statistics Canada
¹⁰ Presentation by Statistics Canada, op.cit
¹¹ ibid.
¹² Organization for Economic Cooperation in Development (OECD). 2000.
¹³ Prime Minister’s Task Force on Women Entrepreneurs. 2003. Pg. 26
¹⁴ Statistics Canada op.cit.
¹⁵ Presentation by Industry Canada to the Prime Minister’s Task Force on Women Entrepreneurs. December 13, 2002
¹⁶ Statistics Canada, 2002
¹⁷ Presentation by Statistics Canada to the Task Force, May 6, 2003
¹⁸ 1. FOREWORD pg. 2
¹⁹ Government of Canada Press Release, November 4, 2003
²⁰ Government of Canada Press Release April 30, 2004
²¹ Foundation of Canadian Women Entrepreneurs/BDC and Kartini International Consulting Inc. May 2004
²² Ibid.
²³ Ibid.
²⁴ Elizabeth Muir. “Thinking Outside the Box”. Cited in Trade Matters, Best Practices & Success Stories, Commonwealth Secretariat. 2002. London; Commonwealth Secretariat.
²⁵ Best Practices for Women Entrepreneurs in Canada May 2004

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1.0 Introduction (cont'd)

1.1 Women’s Entrepreneurship in Canada

1.1.1 The Prime Minister’s Task Force on Women Entrepreneurs 2003

1.1.1.1 Response to the Task Force

1.1.2 Best Practices for Women Entrepreneurs in Canada21

1.1.2 Best Practices for Women Entrepreneurs in Canada²¹