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April 14, 2011The first in-depth research in a decade shows Aboriginal small business owners across Canada are growing in numbers and experiencing widespread success in terms of profitability and growth but also in ways that go beyond the bottom line. And, despite the challenges of business ownership, 70% of Aboriginal business owners are clearly optimistic about future revenue growth, finds a new report from the Canadian Council for Aboriginal Business (CCAB).
The number of Aboriginal business owners and entrepreneurs is growing at five times the rate of self-employed Canadians overall, according to CCAB’s research, titled Promise and Prosperity: The Aboriginal Business Survey. Aboriginal businesses are diverse, and are not limited to any one region, industry sector or market.
“The survey results paint a powerful picture of the many entrepreneurship and employment opportunities within the Aboriginal small business community,” says Nancy Schaefer, President of the CERIC Board. “For us, the research provides career counsellors and others in the career development field with new information on a valuable source of jobs and training for both Aboriginals and non-Aboriginals.”
With the last comprehensive study of Aboriginal businesses conducted by Statistics Canada and Aboriginal Business Canada in 2002, CCAB embarked upon the 2011 Aboriginal Business Survey (ABS) to close this knowledge gap, and contribute to the understanding of the opportunities and challenges faced by Aboriginal businesses. The report is a timely exploration – based on telephone interviews with 1,095 First Nations, Métis and Inuit small business owners (defined as those with 100 employees or less) – of their goals and strategies, and the key factors that contribute to their growth.
“The results of the Aboriginal Business Survey shatter the myth that Aboriginal people are a drain on Canadian taxpayers,” says Clint Davis, CEO of the CCAB. “The majority of Aboriginal businesses are profitable and are experiencing stability or growth. Many Aboriginal businesses are hiring and training other Aboriginal people. Overall Aboriginal business owners see themselves as successful and are positive about the future.”
Key Findings
The number of Aboriginal business owners and entrepreneurs is growing at a rate that far exceeds that of self-employed Canadians overall.
- The 2006 Census reported more than 37,000 self-employed Aboriginal people in Canada, up from just over 27,000 in 2001 – an increase of 38%. During this time period, the rate of growth of self-employed Aboriginal people was five times that of self-employed Canadians overall (7%).
Aboriginal businesses are diverse, and are not limited to any one region, industry sector, or market.
- Aboriginal entrepreneurs are well established in construction (18%) and primary sectors (agriculture, forestry, fishing and hunting, mining, and oil and gas extraction; 13%). Yet, just as many operate in knowledge and service-based sectors, such as education, scientific and technical services, or health and social services (28%).
Aboriginal small business owners are succeeding, in terms of profitability and growth but also in ways that go beyond the bottom line.
- Six in 10 (61%) Aboriginal businesses report profits for 2010. These positive financial numbers only tell part of the story. Half (49%) of Aboriginal small business owners consider their business a success, not only because of profits and/or growth, but because they are doing work that is personally rewarding, and have a steady client base.
Successful Aboriginal small businesses are distinguished by their use of annual business plans and innovation.
- One hallmark of successful Aboriginal small businesses is their use of innovation. These businesses are more than twice as likely as the low-success group to have introduced new products or services, or new processes, in the past three years.
Aboriginal small businesses create jobs for Aboriginal and non-Aboriginal people alike.
- Almost four in 10 (37%) Aboriginal entrepreneurs have at least one paid employee, which is consistent with Canadian entrepreneurs generally. The large majority (86%) of Aboriginal businesses with employees employ at least one Aboriginal person.
Aboriginal entrepreneurs rely primarily on their own resources for both start-up and ongoing financing, and access to financing is considered one obstacle to growth.
- To start a business, Aboriginal entrepreneurs rely most heavily on personal savings (55%), compared with business loans or bank credit (17%), credit from government programs (17%), or loans from Aboriginal lending institutions (15%). Personal savings are similarly the primary financing source for start-up small- and medium-sized enterprises (SMEs) across Canada.
Despite the challenges of small business ownership, there is widespread confidence about the future.
- Nationally, seven in 10 (71%) Aboriginal businesses anticipate revenue growth in the next two years. This is consistent with the degree of optimism expressed by Canadian SMEs generally.
The Aboriginal Business Survey is possible through the support of Indian and Northern Affairs Canada, IBM Canada Ltd., RBC Royal Bank and the Canadian Education and Research Institute for Counselling (CERIC). CCAB also recognizes the support of First Air.
