While we are emerging from the economic earthquake relatively unscathed compared to other industrial economies, labour markets shook here too. Ontario lost 160,000 jobs last year. Small business is helping to rectify that. In 2008, SMEs accounted for 52% of the net job gain across the country – something we can thank Canada’s entrepreneurs for, the same segment that is now shrinking. Decommissioning so much of our economic engine at once has long term consequences, a fact not lost on the same Statistics Canada report:
It is widely recognized that small and medium-sized enterprises (SMEs) are engines of economic growth, productivity and job creation in Canada. Fostering entrepreneurial activity is therefore a priority of government. During a time when substantial numbers of entrepreneurs are exiting the market, encouraging Canada’s youth to become the next generation of business owners is particularly important.
The problem is, young Canadians are not becoming entrepreneurs in numbers required to close this staggering gap. To make up for entrepreneurial drain over the last five years alone, we would have needed to produce 500,000 new entrepreneurs. Yet in 2000, young entrepreneurs were under-represented in the entrepreneurial force (9%) compared to their slice of the population (13%). The problem is most acute in Ontario, “where 39% of the population is under 35, but only 29% of SMEs are youth-owned.”
Why should the social enterprise and finance fields care? Because what links social and business entrepreneurs is far greater than what separates them. The mindsets, the behaviour, and the principles of action are the same. And when you talk about the creation of social businesses, the lines really begin to blur between them. This demographic shift is our problem too. Especially given that social finance is a budding field, more start-ups are needed to choose from, to raise the competitive bar for what’s deemed investment-worthy.
Combine these trends with traditional barriers young entrepreneurs face in raising capital, and it becomes clear that we need to act now. We need a more entrepreneurial culture. Canadian culture is known for risk-aversion; it’s a frame of thinking that dissuades youth from uncertain career choices, and investors from investing in them. We literally can’t afford this kind of thinking anymore.
It’s time to do something different. How? Put simply, encourage new entrepreneurs and throw our support behind existing ones. Here are three ways to get started:
- Invest in young entrepreneurs! CYBF boasts a remarkably high repayment rate (94%). But you don’t need to be an investment body to do that. At YSEC, we put our money where our values are. With an inaugural loan to Preparing the Trail, a youth-led/run/founded social enterprise, they generated a three-fold return from it. We’re reloading for an autumn round. And 78% of young entrepreneurs have at least five years of management experience. With good guidance, it is worth your while to invest what you can afford to.
- Early entrepreneurship education! It doesn’t exist, and it needs to. Entrepreneurship can become part of our national psyche if we get these kinds of opportunities into high schools, junior highs, extra-curricular programs, and summer camps. If you are in this sector, chances are you have opportunities to provide a space for adolescent entrepreneurs to experiment. Seize them.
- Celebrate young entrepreneurs! Young people emulate those they admire. We need to show them homegrown success stories – the more local the better, down to the neighbourhood. We don’t just need a list of Canada’s top ten, we need a list of Etobicoke’s top ten and Malvern’s top ten.
There are some organizations that are doing it right, and I encourage you to connect, support and learn from them. To name a few (but not all): Canadian Youth Business Foundation,George Brown’s Institute of Entrepreneurship & Community Innovation, Ryerson Angel Network, and Impact Entrepreneurship, and on the social entrepreneurship side there’s Be A Maverick, and I’d like to believe YSEC is somewhere in that mix.
More are needed, as fast as possible.
Assaf Weisz is executive director of the Young Social Entrepreneurs of Canada – the nation’s hub for young social entrepreneurs – and a supporter of their social enterprises.