Lack of top companies created in Quebec
Study for Caisse explores motivations, obstacles and generational differences
Entrepreneurship in Quebec — or the lack of it — is getting a lot of attention following the release of a study on the issue prepared for the Caisse de dépôt et placement du Québec.
One of the mandates of the giant public pension investment fund is to support the provincial economy by investing in Quebec companies.
When Quebec Inc. was booming in the 1980s and ’ 90s, that task was easier. Today, there’s a noticeable lack of world- beaters among the companies being created here.
Montreal has lost a significant number of head offices while the overall rate of business formation in Quebec is below what can be found in other provinces. So the Caisse asked the faculty of management at Université Laval to prepare an in- depth look at today’s generations of entrepreneurs.
What drives people in Quebec to start a business and what obstacles do they encounter along the way? Are there significant differences between generations? Among those surveyed, the factors related to starting a business were self- confidence, independence, knowledge of the particular business sector, support from one’s personal entourage, competent and experienced collaborators, a good network of contacts and access to professional advice.
Commonly reported obstacles to entrepreneurship were the high level of business taxation and regulation in Quebec, insufficient aid from government and lack of financing.
But while entrepreneurship may be flagging, there’s at least some good news. The findings of the Laval study seem to indicate an upturn in business interest and risk- taking among young people.
Seventy per cent of those entrepreneurs surveyed in generation Y ( 20- to 36- year- olds) hold university degrees and that generation of business owners seems much better educated than its predecessors. The figure was 36 per cent for generation X ( 37 to 46) and 34 per cent for baby boomers.
In particular, younger business owners had more schooling in management issues than their boomer predecessors.
Work habits are also different. Younger business owners work from home more easily than boomers and tend to adapt technology to their lifestyle.
They’re also getting an early start. Among those surveyed, the average age to start a company was 29 years old, while 26 per cent were still students at the time their companies were founded.
Generation X and Y entrepreneurs showed more inclination to associate with partners in one or more businesses, while boomers were more often the sole proprietors of their companies.
As one might expect, access to financing is a big issue for business owners and often determines success or failure. More than half ( 57 per cent) had to dip into their personal savings to finance their businesses while 42 per cent turned to traditional financial institutions and 13 per cent took “love money” from family and friends.
It can be a tough road. The study showed that 30 per cent of those surveyed had yet to reach profitability. In the circumstances, getting professional advice from experts and mentors ranked high, with more than half of entrepreneurs from all generations making it a priority.
Despite the difficulties they encounter, many qualify as “serial” entrepreneurs, with about 30 per cent of respondents actively considering the possibility of starting another company in the next five years. Another 25 per cent said they would consider buying an existing enterprise.
The outlook is reasonably bright, say researchers Maripier Tremblay and Yvon Gasse, because generation Y is bringing a new set of skills to the task.
Not only do they have a better education in management issues, they are more experienced because of an earlier start in business. They also tend to own several businesses at the same time.
However, they need some help, especially with funding. “The financing problem is the most significant concern of young entrepreneurs. Most of them have no subsidies or guaranteed loans when they get started and private capital in Quebec is very limited when compared to the rest of Canada.”
A dose of international ambition would help, too. “Very few entrepreneurs dream of transforming their business into a world- class organization because of the difficulties of penetrating international markets.”