Table of Contents
- Introduction
- Aboriginal Entrepreneurs — The Demographics
- Business Performance
- Business Structure
- Business Operations
- Financing
- Business Objectives and Future Growth Expectations
- Business Closures and Bankruptcies
- For more information
Introduction
Aboriginal businesses are performing increasingly well in
today's competitive environment, according to a new Statistics
Canada survey. Over 27,000 self-employed individuals of Indian,
Métis and Inuit heritage are creating economic opportunities
for their peoples — and making an important contribution to
Canada's economy. Their businesses are growing, reporting
profits and gaining ground in higher knowledge sectors such as
professional, scientific and technical services.
For more than a decade, Industry Canada's Aboriginal Business
Canada program has been supporting the establishment and growth
of Canada's Aboriginal businesses, through information, financial
support, and activities that are raising the awareness of
Aboriginal business success. This support is yielding dividends,
for the benefit of all Canadians.
The following report provides information on the
characteristics of Aboriginal entrepreneurs and their businesses,
based on 2001 Census data and recent findings from the
Aboriginal Entrepreneurs Survey (2002).
The Aboriginal Entrepreneurs Survey — which used
2002 as the reference period — was conducted in the
fall of 2003 by Statistics Canada (on behalf of Aboriginal
Business Canada), with 1,126 Aboriginal entrepreneurs.
Aboriginal Business Canada would like to acknowledge the financial contribution of survey partners: FedNor, Western Economic Diversification Canada, Indian and Northern Affairs Canada, Business Development Bank of Canada, Natural Resources Canada, Atlantic Canada Opportunities Agency, and Industry Canada’s Small Business Policy Branch.
Aboriginal Entrepreneurs — The Demographics
1
Since 1996, the number of self-employed Aboriginal
people in Canada has increased by 30.7% -
a rate nine times higher than for self-employed Canadians
overall (3.3%)
In 2001, there were 27,195 self-employed Aboriginal people in
Canada, representing 2.78% of the overall Aboriginal population.
Fourteen percent (14%) of self-employed Aboriginal people
resided on-reserve, while 86% resided off-reserve. The
proportion of self-employed Aboriginal people living in urban
areas (52%) was very similar to that of those living in rural
areas (48%).
The proportion of North American Indian and Métis
entrepreneurs was almost identical, at 46 and 47 percent
respectively. Taken together, these two groups represent over 90%
of Canada's Aboriginal entrepreneurs. Inuit represent
3%.
Since 1996, the number of self-employed Aboriginal people in
Canada has increased by 30.7% - a rate nine times higher than
for self-employed Canadians overall (3.3%).
On average, Aboriginal entrepreneurs were younger than other
Canadian entrepreneurs, with over one quarter under the age of
35. The median age group for self-employed Aboriginal people was
35 to 44, while it was 45 to 54 for Canadians overall.
Among self-employed Aboriginal people, the proportion of
self-employed women was higher off-reserve (37%) than on-reserve
(31%). North American Indian people had the highest proportion
of self-employed women (38%), while Inuit had the lowest
(29%).
Business Performance
Aboriginal businesses are performing increasingly well
in today's competitive environment and gaining ground in higher knowledge
sectors.
Over seven out of ten (72%) businesses surveyed in the
Aboriginal Entrepreneurs Survey reported profits in 2002
(up 11 percentage points from 1996). Forty-three percent (43%)
reported an increase in sales revenues between 2001 and 2002, and
39% reported stable sales.
Two thirds of the businesses surveyed had been
operating for more than five years, and four out of ten had been
operating for 10 years or more.
Ninety-one percent (91%) of business owners stated that they
operated in a competitive industry. In the past two years, 45% of
entrepreneurs surveyed innovated — that is they introduced new
products or processes in their business.
Since 1996, the number of Aboriginal businesses operating in
higher knowledge sectors, such as professional, scientific and
technical services, has increased significantly. The number of
manufacturing, transportation and warehousing businesses has also
increased.
Business Structure
In 2002, the establishment of new Aboriginal businesses
largely exceeded the number of acquisitions.
Eighty-four percent (84%) of businesses surveyed started-up on
their own or with partners, while only 16% used acquisitions as a
start-up mechanism.
Over two thirds of businesses surveyed operated under a sole
proprietorship structure, and more than three quarters were
home-based.
Sixty-seven percent (67%) of businesses surveyed operated
under a sole proprietorship, 18% operated under a partnership,
and 15% were incorporated.
Seventy-seven percent (77%) of entrepreneurs surveyed
indicated that they operated their business from home. This
proportion was highest among primary industries (89%), and lowest
in wholesale and retail trade (54%).
Business Operations
Industry Sectors
Aboriginal businesses are gaining ground in higher
knowledge sectors.
The number of Aboriginal businesses operating in professional,
scientific and technical, education, health and social services
has more than doubled since 1996. The number of manufacturing,
transportation and warehousing businesses was almost five times higher
in 2001 than in 1996.
Industry |
|
|
|
| Primary |
25.0% |
20.3% |
15.7% |
| Construction |
28.0% |
15.1% |
12.1% |
| Maunfacturing, Transportation, Warehousing |
2.0% |
9.9% |
9.5% |
| Wholesale, Retail Trade |
20.0% |
13.7% |
17.2% |
| Arts, Entertainment, Accomodation, Food & Cultural |
7.0% |
4.6% |
4.7% |
| Professional, Scientific & Technical, Education, Health & Social |
7.0% |
17.7% |
27.7% |
| Other |
11.0% |
17.7% |
13.0% |
| Total |
100.0% |
100.0% |
100.0% |
1
Statistics Canada, Aboriginal Business Survey, 1996
2
Statistics Canada, 2001 Census
Employment
Aboriginal entrepreneurs are creating jobs for
themselves and for others.
Sixty-nine percent (69%) of entrepreneurs surveyed saw
personal or family employment as a very important business
objective to pursue.
Over one third (35%) of Aboriginal businesses had one or more
full-time employees, and 29% had one or more part-time employees.
Aboriginal business owners in primary industries (e.g.
agriculture, forestry, mining) were most likely to hire
Aboriginal people, with over 70% reporting that one or more of
their full time employees was an Aboriginal person.
Markets
In 2002, Aboriginal entrepreneurs focussed primarily on
local markets to sell their goods and services.
Over half of the entrepreneurs surveyed sold more than 75% of
their goods and services in local markets. A majority (56%) sold
some goods and services within their province, and 18% sold to
other provinces. Some 13% of businesses exported a portion of
their goods and services to other countries.
Seventy-two percent (72%) of Aboriginal entrepreneurs who were
already exporting stated that they planned to increase their
sales outside of Canada in the next two years. Sixteen percent
(16%) of Aboriginal businesses that were not exporting at the
time of the survey stated that they planned to start exporting in
the next two years.
Financing
While half of entrepreneurs surveyed did not borrow
funds to start their business, almost one third borrowed 50% or more of
their start-up funds.
Eighty percent (80%) of entrepreneurs surveyed required less than
$50,000 to start their business. However, 11% needed more than
$100,000.
Start-Up Financing |
% |
| Less than $5,000 |
34.0% |
| $5,000 to $9,999 |
12.9% |
| $10,000 to $24,999 |
22.4% |
| $25,000 to $49,999 |
11.1% |
| $50,000 to $99,999 |
8.9% |
| $100,000 or more |
10.8% |
Source: Statistics Canada,
"Aboriginal Entrepreneurs Survey", 2002
While half of businesses surveyed did not borrow funds to
start their business, almost one third borrowed 50% or more of their
start-up funds.
% of Borrowed Start-up Funds |
% |
| 0% |
49.8% |
| Less than 10% |
4.7% |
| 10% to 24% |
4.8% |
| 25% to 49% |
8.1% |
| 50% to 74% |
14.5% |
| 75% to 99% |
9.8% |
| 100% |
8.2% |
Source: Statistics Canada,
"Aboriginal Entrepreneurs Survey", 2002
The most frequently used sources of financing were personal
savings, retained earnings as well as loans or lines of credit
from financial institutions.
Nearly one in five businesses surveyed had received financial
support from governments or Aboriginal
organizations.
Sources of Financing |
Start-Up |
2002 |
Future |
| Loans or lines of credit from financial institutions |
37.0% |
37.4% |
39.3% |
| Credit unions and Caisses populaires |
13.6% |
12.0% |
15.1% |
| Credit Cards |
17.6% |
27.7% |
27.4% |
| Aboriginal lending organizations |
7.9% |
4.1% |
22.3% |
| Credit from governmental programs |
11.1% |
3.6% |
17.1% |
| Retained Earnings |
n.a. |
60.2% |
61.3% |
| Leasing |
9.2% |
10.0% |
10.5% |
| Personal Savings |
82.9% |
51.7% |
45.9% |
| Loans or equity from friends or relatives |
17.3% |
6.6% |
6.2% |
| Other |
2.4% |
2.0% |
2.5% |
Source: Statistics Canada, "Aboriginal Entrepreneurs Survey", 2002
Business Objectives and Future Growth Expectations
Stability, profitability and personal/family employment
are the business objectives most frequently pursued
by Aboriginal entrepreneurs.
When asked to qualify business objectives, the objectives most
frequently identified as being "very important" were stability
(84%), profitability (80%) and personal or family employment
(69%). Growth ranked fourth and was mentioned as being very
important by (58%) of entrepreneurs.
Nearly two out of three entrepreneurs surveyed expected
their business to grow in the next two years.
Sixty-three percent (63%) of entrepreneurs surveyed expected
their business to grow in the next two years. When asked about
strategies to achieve their business objectives, entrepreneurs
mentioned management skills most often (75%) followed by the
ability to use technology efficiently (63%), production (63%) and
financing (59%).
The most frequently mentioned growth strategies were finding
new customers in existing markets (74%), increasing sales to
existing clients (50%), as well as improving advertising or
marketing (49%).
Of those who did not expect their business to grow, 56% said
that barriers prohibited growth, 39% were not interested in
growing their business, and 12% were not willing to take the
risks associated with growing their business. General economic
conditions, taxes and access to financing were the barriers most
often identified as being very important in explaining the
absence of growth expectation.
Eighty-four percent (84%) of Aboriginal entrepreneurs surveyed
mentioned that they would be seeking financial and business
development assistance from governments and Aboriginal
organisations in the future. Entrepreneurs also expressed
interest in receiving business networking assistance (54%),
market information (52%), and training and skills development
(51%).
Business Closures and Bankruptcies
In 2002, only 3% of businesses surveyed closed their
doors.
In 2002, only 3% of businesses surveyed closed their doors. Of
businesses no longer in operation at the time of the survey, 16%
had declared bankruptcy. Personal factors (e.g. illness, family
matters) contributed to more than half of business closures.
Fewer entrepreneurs mentioned access to financing as a factor
contributing to business closure, compared to 1996 (20% vs.
28%). Fewer identified competition as a factor (12% vs. 22%).
For more information...
This report provides information on the characteristics of Aboriginal entrepreneurs and their businesses,
based on 2001 Census data and recent findings from the
Aboriginal Entrepreneurs Survey (2002). For further information, contact Aboriginal Business Canada at (613) 941-5300, or visit the Web
site (www.abc-eac.ic.gc.ca).
1
Source: Statistics Canada, 2001 Census
