Promise and Prosperity: Promise and Prosperity: The Aboriginal Business The Aboriginal Business Survey Survey Presented to: Aboriginal Entrepreneurs Conference and Tradeshow Ottawa, ON October 24, 2011
Promise and Prosperity:Promise and Prosperity:The Aboriginal Business SurveyThe Aboriginal Business Survey
Presented to:Aboriginal Entrepreneurs Conference and Tradeshow
Ottawa, ON
October 24, 2011
2
Agenda
• Project background
• Who are Aboriginal entrepreneurs?
• How are they faring?
• What are their challenges?
• What about EDCs?
• What does the future hold?
• Concluding thoughts and recommendations
4
Why does this research matter?
• Development of a strong business sector is essential to the future prosperity of Aboriginal peoples
• Aboriginal self-employment is on the rise
• Lack of current information
5
Research objectives
• Deepen our understanding: the successes, the opportunities and the challenges
• Determine goals and strategies used
• Identify key factors that contribute to growth and success
• For EDCs, address significant information gap
6
Methodology
Aboriginal Business Survey• Telephone interviews with 1,095 First Nations, Métis and Inuit small business
owners (100 employees or less)
• Survey field dates: September 10 to November 19, 2010
• National sample stratified by Aboriginal identity group, region, business type and size, based upon 2006 Census statistics
Survey of EDCs• 50 interviews with senior executives of Aboriginal EDCs
• Survey field dates: September 13. 2010 to January 18, 2011
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Research Advisory Board
Leanne Belgarde, Potash Corp. of Saskatchewan
Dr. Susan Black, Intact Financial Corporation
Trevor Ives, Peter Ballantyne Developments Partnership Ltd.
Sonya Kunkel, BMO Financial Group
Nicole Ladouceur, Aboriginal Affairs and Northern Development Canada
Mary Jane Loustel, IBM Canada Ltd.
Jennifer Morse, Aboriginal Affairs and Northern Development Canada
Dr. Doug Norris, Environics Analytics
Dale Sturges, Royal Bank of Canada
Julie Tipene-O’Toole, Koori Business Network (Australia)
Karen Young, KB Jodan Inc.
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CCAB thanks the generous supporters of the research:
Aboriginal Affairs and Northern Development Canada
Who are Aboriginal entrepreneurs?
10
Aboriginal small businesses are diverse
%
Aboriginal Identity*
Métis 49
First Nations 48
Inuit 2
Region*
Atlantic provinces 5
Quebec 10
Ontario 23
Manitoba 10
Saskatchewan 8Alberta 18British Columbia 22Territories 3
* Source: Statistics Canada 2006 Census
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Aboriginal small businesses are diverse (continued)
%
Sector*
Primary 13
Construction 18
Manufacturing 10
Wholesale, retail trade 9
Professional services 27
Arts, entertainment, food 12
Other services 11
Have clients in...
Local community 85Other parts of territory/provinces 73Other territories/provinces 48United States 26Countries outside Canada/U.S. 18
* Source: Statistics Canada 2006 Census
How are they faring?
13
Aboriginal entrepreneurs are realizing business success
61%Net profit
for 2010
35%Increased revenues
2009-2010
14
They are also succeeding in ways beyond the bottom line
Extremelysuccessful
Verysuccessful
Somewhatsuccessful
Not verysuccessful
Not at allsuccessful
dk/na
12
3740
7 2 2
Based on your own personal objectives for your business, how successful do you feel your business has been to date?
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They report other advantages to small business ownership
Advantages of being a small business ownerTop mentions
16
Success is distinguished by the use of business plans and innovation
High success
Low success
Formal business plan in place 33% 19%
Innovation in past three years New products/services 55% 22% New processes 42% 20%
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They are creating jobs for Aboriginal and non-Aboriginal people
37%
of Aboriginal small businesses have
employees*
On average:62% are Aboriginal
38% are non-Aboriginal
* Source: Statistics Canada 2006 Census
What are their challenges?
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Heavy reliance on personal financing to start up businesses
dk/na
Other
No financing
Business loans/credit from creditunions or caisses populaires
Personal credit cards
Loans or equity from friends/family
Personal loans from a bank, creditunion or caisses populaire
Loans from Aboriginal business lending institutions
Credit from other government programs(INAC or Aboriginal Business Canada)
Business loans/credit from bank
Personal savings 55
17
17
15
8
3
3
2
2
4
6
Main sources of financing used to start up your business
20
Their own resources are also a main source of on-going financing
Importance of current sources of financingVery or somewhat important
Government grants and loans
Aboriginal lending agencies and capital corporations
Personal loans or lines of credit from financial institutions
Business loans or lines of credit from financial institutions
Retained earnings
Personal savings 75
74
62
55
52
51
21
Access to financing and equity are considered obstacles to growth
Obstacles to growing business over next two yearsTop 2 box on 5-point scale
Trade regulations/exchange rate
Availability of skilled labour
Government policy, rules/regulations
Infrastructure (internet access, telephone, electricity, water, roads)
Cost of borrowing
Cost of doing business, input costs
Competition
Access to equity or capital
Access to financing
Overall economic conditions 46
43
38
38
38
37
36
34
33
15
22
Few have access to valuable business guidance or advice
Individuals or organizations who have been particularly important in providing guidance/advice about your business
23
A minority have used government programs
Government programs used to start-up/maintain business
What about EDCs?
25
Who are they?
• Small, but long-term and growing
o 68% are small businesses (less than 100 employees)
o 72% in business for 10 years or more
o 68% report revenue of $1 million or more
o 54% report revenue growth from previous year
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Community-wide benefits are part of their definition of success
“These [projects] have been very successful. And we have invested these monies into the communities – daycares, recreational facilities, radio station, poverty fund, sports. Close to $100 million has been put into this infrastructure.”
27
EDCs identify two key challenges
What does the future hold?
29
Aboriginal entrepreneurs are optimistic about the future
71%Anticipate revenue growth in next two
years
71%Likely still running business in five
years
30
EDCs are similarly confident about the future of their organizations
78%Anticipate revenue
growth over coming year
66%Plan to increase
capital investments in 2011
Concluding Thoughts
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Summary
• Aboriginal businesses are creating opportunities
• Key challenges:
o Inadequate access to financing and equity/capital
o Workforce issues (EDCs)
o Limited advice/guidance (private entrepreneurs)
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CCAB Recommendations
Improve access to
capital
Provincial & municipal
procurement strategies
Develop & implement
business plans
Build stronger networks