A survey of Canadian small business owners by Ownr – a venture within RBCx – reveals how entrepreneurs are tackling inflation and the various factors driving small business creation in 2023.
TORONTO, ON, May 2, 2023 – Ownr, a leading Canadian small business and legal management platform, released new data today that shows the effects of inflation and economic uncertainty on entrepreneurship. While some small businesses continue to be challenged by cash flow issues, many aspiring entrepreneurs are using the opportunities created by current market conditions to start side hustles and businesses to add to their income as a means to combatting the rising cost of living.
Entrepreneurship from 2022 to now:
- Cash flow overshadows inflation/economic uncertainty as top concern – In 2023, cash flow issues are increasingly the top concern for entrepreneurs (46.6%, up from 38.9% last year) while inflation/economic uncertainty takes a back seat (22.7%, down from 33.5% last year).
- Small businesses continue to raise prices to adjust for inflation – In 2022, 30.5 per cent of business owners had raised their prices by over 10 per cent due to inflation and rising costs. In 2023, about 23.3 per cent have raised prices by over 10 per cent. The majority (30.6%) say it hasn’t affected their business yet but expect it to soon.
- Optimism is growing despite inflationary conditions – As small business owners adapt to inflation and rising costs, almost half (47.7%) of respondents feel more optimistic about their business plans now than they did six months ago.
- Side hustles are on the rise – Amidst rising cost of living and economic uncertainty, 41.7 per cent of respondents started their business as a side hustle, and almost 1 in 4 (24.9%) started their business to create an additional revenue source.
- Newcomers see entrepreneurship as a path to financial independence – Of the 39.2 per cent of respondents who identified themselves as an immigrant to Canada, almost half (46.9%) cited financial freedom/supporting their family as their top motivator behind starting a business in Canada.
Inflationary conditions serving as a motivation for aspiring entrepreneurs
After months of adapting and pivoting in the face of economic uncertainty and supply chain challenges, Canadian entrepreneurs are increasingly optimistic about their business outlook – with almost half (47.7%) of respondents feeling more positive about their business plans now than they did six months ago.
Solopreneurs, or individuals who operate their business alone without any partners or employees, have been growing in popularity as Canadians look to increase their income with minimal overhead costs. It is this particular group that are looking to further invest in their business. Out of 67 per cent of respondents who identified as solopreneurs, the majority (65.1%) said they hope to expand their team with the goal of growing their business.
Not only are existing small business owners more optimistic, but many new entrepreneurs are motivated by the current economic conditions to explore entrepreneurship as a means of keeping up with the rising cost of living. Almost 1 in 4 (24.9%) small business owners started their business as an additional revenue source. This is an increase from the findings of Ownr’s 2022 survey, where only 18 per cent indicated this. Additionally, the percentage of entrepreneurs who indicated they run their business as a side hustle has increased – from 37.8 per cent in 2022 to 41.7 per cent in 2023.
“Entrepreneurship remains alive and well in Canada. Rather than deterring desires to pursue small business ownership, economic uncertainty has created a rise in solopreneurship, and it’s driving Canadian entrepreneurs to be more scrappy and creative as they adapt and pivot their business plans,” said Sid Paquette, Head of RBCx. “We are proud to have helped more than 100,000 Canadians launch their entrepreneurial dreams into reality through Ownr, and we remain committed to enabling small businesses to bring innovative new ideas to market and thrive on their entrepreneurial journey.”
Canadian newcomers are pursuing entrepreneurship to achieve financial freedom, but barriers persist
Among the 39.2 per cent of respondents who identified themselves as a newcomer to Canada, almost half (46.9%) stated they were motivated to start a business in Canada to achieve financial freedom and support their family. Despite the flexibility entrepreneurship can offer, barriers still persist for new immigrants to Canada. The greatest challenge identified was access to funds (53.5%), followed by a lack of network/industry connections (37.2%).
“Newcomers make up an important part of the fabric of the Canadian small business community by bringing their diverse perspectives and new ideas to the marketplace,” said Derek Hopfner, Chief Revenue Officer at Ownr. “It’s essential that we break down barriers to entrepreneurship by understanding the nuanced needs and challenges of newcomers, and ensure that all aspiring entrepreneurs have access to the resources and support they need to thrive. By empowering diverse small business owners, we can build a stronger, more vibrant economy for Canadians to benefit from.”
Ownr makes it easier and more affordable for businesses to incorporate, register and confidently handle ongoing legal compliance. We know that starting and running a business takes a huge amount of effort. By simplifying and automating business formation and everyday compliance work, we help small businesses thrive. Ownr has helped over 100,000 Canadians launch their dreams since 2017. Ownr is a venture of RBCx, a division of Royal Bank of Canada. For more information, visit www.ownr.co/.
RBCx powers bold ideas, founders, and technology companies. We know building great businesses takes more than just finance, which is why our four pillars – Banking, Capital, Platform, and Ventures – combine to make us the go-to backer of Canadian innovation. We use our deep expertise to support businesses of all sizes and stages, and leverage RBC’s extensive experience, networks, and capital to solve tomorrow’s big problems.
Anne-Marie Tremble | firstname.lastname@example.org | 613-914-3551
The survey, conducted between March 23, 2023 to April 17, 2023, captures the responses of 1,044 participants based in Canada via an online questionnaire provided to Ownr’s customer database. Every participant is either an existing entrepreneur or is planning to launch their business in the future. The results of this report have an estimated 3 per cent margin of error.