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As part of our 10th anniversary celebrations we are
going to devote one article in each issue of the BR Newsletter to
exploring trends in small business and entrepreneurship in Canada over
the last 10 years.
Detailed tables will be included at the end of each
article.
Entrepreneurs can be found all across Canada, from sea to sea to sea.
Self-employment however is increasing becoming an urban-only phenomenon.
Between 1997 and 2006, the number of self-employed Canadians living in
the largest 16 metropolitan areas grew by a net 201,000. The rest
of country over the same period actually lost 52,400 entrepreneurs.
Before you pack your bags and head for
the big city however, it should be noted that the bulk of these gains
were made around the turn of the millennium when urban self-employment
accounted for 271.8% of the net gains between 1997 and 2003. Recent
growth has been more proportionate to the urban population. Between 2003 and 2006 the Big 16 accounted
for 60.9% of the net gains as compared to their 59.7% share of the
population.
In fact when you compare the share of
the self-employed and the share of population held by the Rest of
Canada, smaller cities and rural communities are actually punching
slightly above their weight both now and in the past. In 1997, 47%
of the self-employed lived outside the Big 16 even though this area only
account for 43.1% of the population. Similarly in 2006, this area
held 42.1% of self-employed as compared to 40.3% of the population.
It is not that Canadians living outside the Big 16 are no longer
interested in starting their own businesses. Rather it is a
situation where Canada is becoming a more urban nation.
Types of Businesses Started - Big
16 vs. Rest of Canada
The services sector is the engine of
self-employment growth right across Canada. Over the ten year study
period there was a net increase of 161,700 self-employed service sector
businesses. The goods sector meanwhile suffered a net loss of 13,100.
In urban centres 8 out of 10 self-employed businesses now belong to the
service sector while in the Rest of Canada the figure is closer to
6 out of 10.
The fastest growing services
industries since 1997 are different in the two geographical areas. Among
the Big 16, Finance, insurance, real estate & leasing (+48.2%)
and Educational Services (44.6%) have grown the fastest. In the Rest of Canada service
sector growth has been generated primarily by Business, building & other support
services (+37.2%), and Professional, scientific & technical services
(29.9%).
The losses suffered by the goods
sector are concentrated around the turn of the millennium. Losses in
Agriculture and Manufacturing were especially acute. Over the last 4
years however the goods sector has rebounded dramatically to actually outpaced the service sector
in net growth with significant increases in both the Construction and Forestry,
fishing, mining, oil & gas extraction sectors. In fact since
2003 Construction is among the
top three industry sectors in both the Big 16 and in the Rest of Canada.
The momentum industries, those growing
the fastest over the last year (2005-2006) for urban entrepreneurs are
Transportation & Warehousing (+6.5%) and Finance, insurance,
real estate & leasing (+5.0%). In the Rest of Canada momentum
lies in the Finance, insurance, real estate & leasing (+12.3%) and
Forestry fishing, mining and oil & gas extraction (+13.0%).
Where in Canada does the momentum lie?
The largest 16 metropolitan areas in
Canada are driving entrepreneur growth but which of these cities can lay
claim to the greatest entrepreneurial momentum? When the top 16 metropolitan areas in
Canada are compared directly there are a number of ways of ranking their
growth in self-employment. Over the full 10 year study period,
Windsor is the undisputed self-employment champion. Between 1997
to 2006 self-employment grew by 58.3%. This is well ahead of
second place Oshawa where self-employment expanded by
38.6%.
As mentioned above, the bulk of this
urban self-employment growth occurred around the turn of the millennium. To get
a better understand of where entrepreneurial momentum is centred today, we
need to break-up the ten-year period into three sections: historic
1997-2003, recent 2003-2006 and current 2005-2006. When the 16
cities are ranked by their self-employment growth rate over these three
periods only three cities have consistent positive momentum through the ranks.
One of the most dramatic performances
is by Hamilton which has been steadily climbing the growth
ranking since 1997. The steel city jumped from a ranking of 12th
between 1997-2003 to 5th for the period 2003-2006 and last year demonstrated the
fastest one year growth rate in the country (15.2%). Another city
on a similar self-employment growth trajectory is Quebec City.
Between 1997 and 2003, self-employment growth in the Quebec capital was
the worst of the top 16 metropolitan areas. Over 2003 to 2006
however, it jumped 10 places in the ranking to 6th place and for the
latest period has settled into 4th place.
London, the third of our momentum
cities is an interesting case.
Between 1997-2003 London ranked second last among the Big 16 in
entrepreneurial growth. Over the next period it rose modestly two
places to number 13 but it has since sky-rocketed "with a bullet" to number 3 on the latest
one year growth ranking.
Top sectors in top cities
When the three momentum cities are
examined individually, it is clear they have all found ways to utilize the
unique talents of their entrepreneurial populations. Hamilton's top
recent and current growth industries for self-employment remained
consistent: Finance, insurance, real estate and leasing and
Construction.
Quebec City on the other hand has
relied entirely on the Manufacturing and Information, cultural & recreation sectors for
its self-employment growth between 2003-2006 and 2005-2006.
Meanwhile London recorded phenomenal
growth in the Agriculture sector (+62.5%) between 2003 and 2006, with
its most recent growth relying on Construction (+18.9%) and Other Services
(+25.0%).
What is particularly impressive about
all three of these cities is that over the last year (2005-2006)
they have posted increases in self-employment in direct contrast to the
overall decline among the Big 16 and the Rest of Canada.
Over the last ten years, the face of
self-employment in Canada has become distinctly urban. But simply living
in a big city alone does not make you a successful entrepreneur.
The fundamentals apply no matter what your address is. You need to
recognize opportunity and have the skills and persistent confidence
to pursue it.
|
Self-Employment Growth in Canada |
|
|
Number (000s) & Percentage Share |
Net Growth & Share of Growth Rate |
|
|
1997 |
2003 |
2005 |
2006 |
1997-2006 |
1997-2003 |
2003-2006 |
2005-2006 |
| CANADA |
2349.4 |
2401.8 |
2511.6 |
2498.0 |
148.6 |
52.4 |
96.2 |
-13.6 |
| Top
16 Largest Cities |
1244.4 |
1386.8 |
1453.6 |
1445.4 |
201.0 |
142.4 |
58.6 |
-8.2 |
| Rest
of Canada |
1105.0 |
1015.0 |
1058.0 |
1052.6 |
-52.4 |
-90.0 |
37.6 |
-5.4 |
|
|
|
|
|
|
|
|
|
|
| Top
16 Largest Cities |
53.0% |
57.7% |
57.9% |
57.9% |
135.3% |
271.8% |
60.9% |
-60.3% |
| Rest
of Canada |
47.0% |
42.3% |
42.1% |
42.1% |
-35.3% |
-171.8% |
39.1% |
-39.7% |
|
Source: Statistics Canada |
|
Self-Employment by Industry Sector |
| |
Number (000s) |
|
|
1997 |
2005 |
2006 |
|
|
Big 16 |
Rest of Canada |
Big 16 |
Rest of Canada |
Big 16 |
Rest of Canada |
|
TOTAL INDUSTRIES |
1244.4 |
1105.0 |
1453.6 |
1058.0 |
1445.4 |
1052.6 |
|
GOODS PRODUCING SECTOR |
236.7 |
464.3 |
275.7 |
410.3 |
280.6 |
407.3 |
|
Agriculture |
17.0 |
279.4 |
19.3 |
197.2 |
18.0 |
189.3 |
Forestry Fishing, Mining and Oil and Gas
Extraction |
8.0 |
45.1 |
4.7 |
46.1 |
3.7 |
52.1 |
|
Construction |
138.9 |
105.5 |
187.8 |
133.0 |
195.4 |
137.3 |
|
Manufacturing |
60.0 |
46.5 |
49.1 |
48.4 |
49.0 |
42.9 |
|
SERVICES PRODUCING SECTOR |
1007.6 |
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