Some people might think that small business owners just launch their companies so they won’t have to deal with a boss. They spend their summers at the cottage and stay really small because they just don’t have the ambition to grow.
Results of a new BDC survey of 865 Canadian entrepreneurs and business decision makers show that this fictitious image of the “lazy” small business owner is just a myth. The survey also provides insights into the top challenges Canadian entrepreneurs are facing, as well as some potential solutions.
Almost all entrepreneurs are ambitious
When my team and I launched this project, we thought that ambition would be correlated with the size of the company. After all, you’d expect more ambitious entrepreneurs to build and run larger businesses. Instead, we found that almost every entrepreneur is ambitious and:
- willing to make personal sacrifices to grow their business
- constantly taking risks to invest in new opportunities
When we combined their answers to put a number on their level of ambition, we found that:
of entrepreneurs have low ambition
of entrepreneurs have strong ambition
Small business owners are just as ambitious as their larger peers
We might think that people who launch a business and keep it small are not ambitious. However, we found that the ambition of entrepreneurs is high, regardless of the size of their business.
In my opinion, this may be because entrepreneurs have a different mindset from the beginning. It takes a great deal of courage and ambition to start a business. I would even go as far as to say that if we were to compare the levels of ambition of entrepreneurs with those of salaried employees, we would find that they are probably higher—on average—among entrepreneurs.
Small businesses often lack the means to achieve their ambitions
Our survey asked entrepreneurs about their financing intentions and their use of financing in the past two years. We found that bigger businesses are larger users of financial services. The same goes for advisory services.
of all businesses used a term loan in the past two years
of all businesses used advisory services in the last two years
However, when we looked at how much they intend to use financial products or advisory services in the next two years, we found that there were only a few differences between business sizes.
So how can we explain these results? I’d say that entrepreneurs are probably taking advantage of the opportunities they get. In this particular case, this benefits larger businesses. Bankers are more likely to propose a deal if they know you are more solid and have more guarantees to offer.
Anecdotal evidence shows us that larger businesses don’t necessarily have more ambition, but the opportunities they get are more likely to be realized because they have a stronger ability to invest and carry out projects.
Entrepreneurs are increasingly open to online financing
No matter the size of the business, we are seeing a change in mindset when it comes to entrepreneurs’ willingness to use online financing.
Historically, business owners have been somewhat closed to new technology trends, and online financing was one of those trends. That mentality is beginning to change. More than two-thirds of entrepreneurs are now willing to apply for financing online.
of entrepreneurs are open to applying for financing online
Online financing, at the start, was very consumer focused. Now, as with many other parts of the economy, we are seeing that it’s flowing over to the enterprise side.
Maslow’s hierarchy applied to business needs
We asked entrepreneurs about their main challenges to seizing opportunities.
What is important from my point of view is that for small businesses, the challenges are very much about money. Obviously, access to financing is less of a problem if you have collateral to offer. The more a bank finds you interesting, the more it will proactively approach you to offer money.
As a business grows, it starts having more strategic concerns such as recruiting skilled workers, improving operational capacity and finding trustworthy people to whom you can delegate.
Basically, it’s like Maslow’s hierarchy of needs, but for a business. When you are starting a business, you are more worried about basic survival and getting money to do what you need to do. Over time, needs change and entrepreneurs begin to think about how they will achieve the next steps in their journey. They become financially stronger and, as a result, their needs become more complex and go beyond just getting money.
Another sign that labour shortages are real
One last thing that really stands out for me in this survey is the recurrence of labour shortages affecting Canadian businesses.
of entrepreneurs said availability of skilled workers is preventing them from seizing opportunities
of entrepreneurs said finding highly qualified employees was an impactful solution to their problems
Everything we saw in the last year has been pointing toward labour shortages. We see that all types of businesses, in every sector and in every region are having trouble recruiting employees right now.
In my opinion, these results will translate into a change of attitude regarding recruiting, salaries, etc. Entrepreneurs who want to learn more about these issues can read our study: Worker Scarcity in Canada and What Businesses Can Do to Respond.