Description
This detailed description related to bdc index of new entrepreneurial activity 2012.
BDC INDEX
OF NEW
ENTREPRENEURIAL
ACTIVITY
2
0
1
2
PIERRE MARTELL
PRESIDENT
MARTELL HOME BUILDERS
Executive Summary ----------------------------------------------------------------------------------- 2
Introduction -------------------------------------------------------------------------------------------- 3
1. New Entrepreneurial Activity in Canada --------------------------------------------------------- 4
2. New Entrepreneurial Activity by Region -------------------------------------------------------- 5
3. New Entrepreneurial Activity by Industry ------------------------------------------------------- 8
4. New Entrepreneurial Activity by Age ----------------------------------------------------------- 11
5. New Entrepreneurial Activity by Gender ----------------------------------------------------- 13
6. New Entrepreneurial Activity among Immigrants -------------------------------------------- 14
Conclusion ------------------------------------------------------------------------------------------- 15
Appendix – Other Entrepreneurship Measures ------------------------------------------------- 16
This research was prepared by the Research and Economic Analysis team from Marketing and
Public Affairs. Reliance on and use of this information is the reader’s responsibility.
Copyright © 2012 Business Development Bank of Canada
1 888 INFO BDC | bdc.ca
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 2
> The intensity at which entrepreneurs launch new ventures is a key indicator of economic
dynamism within a country, and an important driver of job creation and innovation. The
slow economic recovery and the impending impact of Canada’s aging population further
highlight the importance of entrepreneurial activity as a means to sustain our levels of
prosperity and standard of living.
> BDC created an Index of New Entrepreneurial Activity to provide up-to-date information
on where the greatest entrepreneurial dynamism resides in the country, and the
characteristics of new entrepreneurs.
> The Index measures, as a proportion of the overall labour force, the number of
Canadians who became independent workers and hired employees in the past year.
In 2011, 43,200 Canadians became self-employed and hired employees.
With 18,699,400 individuals in the labour force for the same period, the BDC Index
was 0.23% (43,200/18,699,400).
> Since the last recession, the BDC Index shows a reduced intensity of new entrepreneurial
activity in the country, both at the national level and in all regions. British Columbians are the
most entrepreneurial in the country, followed by individuals in the Prairies. Ontarians have
been the most reluctant to launch new ventures since the recession. The BDC Index in
Quebec has increased almost to the national level but remains lower than pre-recessionary
levels. The BDC Index for the Atlantic region is equal to the national average, although it
has dipped over the last two years.
> In 2011, industries posting the largest proportions of new entrepreneurs were construction
(BDC Index of 0.49%), accommodation and food services (0.42%), and professional
services (0.38%).
> Canadians aged 25 to 44 have a greater tendency to launch new businesses.
However, the BDC Index has steadily declined within this age group, while increasing
amongst older individuals.
> In general, women are less likely than men to become entrepreneurs. In 2011, the BDC
Index was 0.31% for men, more than double that for women (0.14%).
> Canadian immigrants have a higher tendency to launch new ventures than individuals born
in Canada. In 2011, the BDC Index was 0.35% for immigrants compared to 0.20% for non-
immigrants.
The intensity at which
entrepreneurs launch new
ventures is a key indicator
of economic dynamism
within a country.
BDC created an Index
of New Entrepreneurial
Activity to provide
up-to-date information
on where the greatest
entrepreneurial
dynamism resides in the
country, and the
characteristics of new
entrepreneurs.
Since the last recession,
the BDC Index shows
a reduced intensity of
new entrepreneurial
activity across the
country, both at the
national level and in all
regions.
EXECUTIVE SUMMARY
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 3
The intensity at which entrepreneurs launch new ventures is a key indicator of economic
dynamism within a country. It is also an important driver of job creation and innovation. The slow
economic recovery and the impending impact of Canada’s aging population further highlight the
importance of entrepreneurial activity as a means to sustain our prosperity and standard of living.
Timely information on the appearance of new ?rms in Canada is not easily available. Inspired
by the Kauffman Index of Entrepreneurial Activity
1
in the U.S., BDC decided to use a similar
methodology and create its own Index of New Entrepreneurial Activity. This Index measures the
yearly appearance of new independent workers who hire employees. It allows us to obtain
up-to-date information about individuals creating businesses in Canada.
The BDC Index is based on Statistics Canada’s Labour Force Survey (LFS).The LFS is a monthly
survey of a sample of 56,026 individuals who are 15 years old or more. With this, we have
access to recent data on the number of individuals who have become independent workers
within the past 12 months and who have employees working for them.
2
BDC’s Index of New
Entrepreneurial Activity measures new independent workers
3
with employees as a proportion of
the total labour force. For instance, in 2011, 43,200 Canadians became independent workers and
also hired employees, out of a total of 18,699,400 Canadians in the labour force.
4
That year, the
BDC Index of New Entrepreneurial Activity was therefore 0.23% (43,200/18,699,400).
This report presents the evolution of the BDC Index from 2000 to 2011. It compares the pre-
recession period with the economic crisis and subsequent recovery phase. The Index also looks
at how entrepreneurial trends vary by region, industry, age group, gender and for immigrants.
It allows us to obtain valuable insights on where the greatest entrepreneurial dynamism resides
in the country.
BDC’s Index of
New Entrepreneurial
Activity measures new
independent workers
with employees as a
proportion of the total
labour force. For instance,
in 2011, 43,200 Canadians
became independent
workers and also hired
employees, out of a total
of 18,699,400 Canadians
in the labour force. That
year, the BDC Index of
New Entrepreneurial
Activity was therefore
0.23% (43,200/18,699,400).
1. Kauffman Foundation, Kauffman Index of Entrepreneurial Activity 1996-2011, March 2011. The Kauffman Index captures all new business owners, including
those who are employers or non-employers. The Kauffman Index and other entrepreneurial measures are presented in Appendix 1.
2. We consider that these independent workers are in fact entrepreneurs, as opposed to those who work for themselves and do not hire employees.
3. In this study, the term “independent worker” is used as a synonym for “self-employed”.
4. Canadian Labour Force is composed of civilian workers or unemployed individuals actively looking for a job and who are 15 years old or more.
INTRODUCTION
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 4
NEW ENTREPRENEURIAL ACTIVITY
IN CANADA
Canadians who are independent workers (self-employed) and, in addition, hire employees, can be
considered as constituting the country’s pool of entrepreneurs. In 2011, 835,100 individuals had this status.
They accounted for 4.47% of the 18,699,400 Canadians in the labour force. Among those who were self-
employed, 43,200 people were new to the job, i.e., they had become independent workers within the
last 12 months and, at the same time, created jobs. Therefore, the proportion of new entrepreneurial activity
within the labour force was 0.23% that year (43,200/18,699,400). This constitutes the “BDC Index of New
Entrepreneurial Activity”.
In Figure 1 below, we observe that the BDC Index peaked in 2005, attaining 0.3%. It declined in subsequent
years and remained slightly lower than during the ?rst half of the last decade. In the same graph, we indicate
the share of all self-employed (SE) individuals with employees within the labour force. This includes recent and
older ones. We notice that this share increased over the past two years but remains lower than in some of the
previous years.
Based on these two indicators, the level of entrepreneurial activity is clearly not on an upward trend. What
is somewhat puzzling is that the BDC Index began to decrease even prior to the recession. One explanation
could be that the tight labour market we experienced during this period of solid economic growth did not
entice individuals to leave the labour market and launch new businesses. It also appears that the recession and
following slow economic recovery did not provide fertile ground for entrepreneurship.
Figure 1: 2000 TO 2011 TREND IN NEW ENTREPRENEURIAL ACTIVITY IN CANADA
The level of
entrepreneurial
activity is clearly not
on an upward trend.
It also appears that
the recession and
following slow
economic recovery
did not provide fertile
ground for
entrepreneurship.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.17 4.90 4.74 4.71 4.91 5.02 4.85 4.78 4.73 4.63 4.54 4.47
BDC Index – Canada
0.30 0.29 0.25 0.26 0.26 0.30 0.29 0.25 0.24 0.22 0.23 0.23
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
1.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 5
The national picture of new entrepreneurial activity hides various regional dynamics. In the Atlantic region, for
instance, the BDC Index is more volatile and generally holds above the national index. This was particularly true
during the recession. Overall, however, new entrepreneurial activity is on a downward trend and the share of
the labour force occupied by self-employed individuals with employees has decreased steadily over the years.
At 0.23% in 2011, the BDC Index for the Atlantic region is now equal to the national index.
Figure 2: ENTREPRENEURIAL ACTIVITY – ATLANTIC
In Quebec, both the BDC Index and the share of self-employed workers with employees have generally been
lower than the national average over the decade. At 0.23% in 2011, the BDC Index for Quebec reached the
national index; although still lower than its peak of 0.29% in 2001 and 2005.
Figure 3: ENTREPRENEURIAL ACTIVITY – QUEBEC
In the Atlantic region,
the BDC Index is more
volatile and generally
holds above the national
index.
At 0.23% in 2011, the
BDC Index for Quebec
reached the national
index, although still
lower than its peak of
0.29% in 2001 and 2005.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.75 4.42 4.84 4.56 4.65 4.64 4.59 4.37 4.31 4.16 4.12 4.02
BDC Index – Atlantic
0.33 0.29 0.33 0.25 0.30 0.27 0.30 0.23 0.28 0.29 0.24 0.23
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.28 4.87 4.40 4.33 4.55 4.83 4.53 4.51 4.35 4.24 4.38 4.24
BDC Index – Quebec
0.27 0.29 0.20 0.25 0.18 0.29 0.24 0.28 0.21 0.22 0.22 0.23
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
NEW ENTREPRENEURIAL ACTIVITY
BY REGION 2.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 6
New entrepreneurial activity in Ontario experienced a signi?cant decrease during the recession.
The BDC Index for this province dropped to a low of 0.17% in 2008. It recovered to 0.22% in 2011,
close to the national average. In the Ontario labour force, the proportion of self-employed workers
with employees remained slightly lower than the national average over the period.
Figure 4: ENTREPRENEURIAL ACTIVITY – ONTARIO
The levels of the BDC Index for the Prairies are in line with what we would expect from Canada’s most
dynamic economic region. Despite decreasing in 2009, the Index remained above the national average for
most of the period. From its 2006 peak of 0.38%, it reached a low of 0.22% in 2011. It has remained low by
historical standards over the last three years. It is also worth noting that the proportion of employers within
the labour force is generally higher than average.
Figure 5: ENTREPRENEURIAL ACTIVITY – PRAIRIES
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.86 4.55 4.47 4.53 4.76 4.50 4.43 4.52 4.60 4.49 4.20 4.23
BDC Index – Ontario
0.30 0.25 0.22 0.23 0.24 0.27 0.27 0.20 0.17 0.18 0.22 0.22
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.55 5.32 5.24 5.31 5.27 5.71 5.42 5.16 5.00 4.72 5.01 4.82
BDC Index – Prairies
0.29 0.31 0.24 0.31 0.27 0.31 0.38 0.32 0.31 0.23 0.25 0.22
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
New entrepreneurial
activity in Ontario
experienced a signi?cant
decrease during the
recession.
The levels of the BDC
Index for the Prairies
are in line with what
we would expect from
Canada’s most dynamic
economic region.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 7
Not surprisingly, British Columbia is the most entrepreneurial region in the country. Indeed, the BDC Index
for this province has evolved above the national average for most of the period. This is also re?ected by a
greater share of employers within the labour force than in other regions. These results are consistent with
other statistics showing that the number of small businesses per capita in British Columbia is the second
highest in the country, after Saskatchewan.
1
Figure 6: ENTREPRENEURIAL ACTIVITY – BRITISH COLUMBIA
To summarize, apart from British Columbians, most Canadians have been less entrepreneurial over the last
few years. Furthermore, new entrepreneurial activities have not picked up since the recession. The evolution
of the BDC Index shows that Ontario experienced the biggest slowdown of entrepreneurial dynamism during
the recession. Not surprisingly, citizens in the Prairies and B.C. have shown a greater propensity to create new
businesses.
The negative trends in new entrepreneurial activity have had an impact on the distribution of entrepreneurial
individuals across the country. From 2000 to 2011, Quebec’s share of entrepreneurs (self-employed individuals
with employees) decreased by 2 percentage points, as shown in the Figures below. During the same period,
the Prairies and British Columbia experienced an increase of one percentage point each in their respective
shares.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.61 5.72 5.51 5.21 5.65 6.23 6.07 5.74 5.62 5.82 5.40 5.29
BDC Index – British Columbia
0.33 0.41 0.37 0.30 0.42 0.39 0.29 0.29 0.37 0.32 0.26 0.27
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
Atlantic
6.6%
Quebec
24.0%
Ontario
36.6%
Prairies
18.6%
B.C.
14.2%
Atlantic
5.9%
Quebec
21.7%
Ontario
37.0%
Prairies
19.8%
B.C.
15.6%
Atlantic
6.6%
Quebec
24.0%
Ontario
36.6%
Prairies
18.6%
B.C.
14.2%
Atlantic
5.9%
Quebec
21.7%
Ontario
37.0%
Prairies
19.8%
B.C.
15.6%
Figure 7: SHARE OF SELF-EMPLOYED
WITH EMPLOYEES BY REGION – 2000
Figure 8: SHARE OF SELF-EMPLOYED
WITH EMPLOYEES BY REGION – 2011
1. Western Economic Diversi?cation, BC Ministry of Jobs, Tourism and Innovation, and BCStats, Small Business Pro?le 2011, p.7.
British Columbia is
the most entrepreneurial
region in the country.
Indeed, the BDC Index
for this province has
evolved above the national
average for most of
the period.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 8
In which sectors are Canadians most likely to launch new businesses? In 2011, the industry posting the highest
score in terms of new entrepreneurial activities was the construction sector, and the BDC Index reached
0.49%. While lower than the 0.65% level attained in 2005, it remained elevated compared to other industries.
In addition, within the labour force, the share of self-employed workers with employees was 9.7% in 2011,
much higher than the national average of 4.5%. However, this proportion has declined over the last few years.
Canadians operating in the accommodation and food services industry are also more entrepreneurial than
others. The BDC Index for this industry reached 0.42% in 2011, greater than the national average of 0.23%.
Nonetheless, it has experienced a signi?cant decline since 2006, the year it attained 0.80%. The share of
self-employed individuals with employees within the labour force, which has declined slightly, is now around
the Canadian average.
Another dynamic industry is professional services. The BDC Index reached 0.38% in 2011. While lower than
the 0.51% level reached in 2007, it is on an upward trend following its low of 0.23% in 2008. Furthermore,
the proportion of employers within the labour force has remained stable and, at 8.6% in 2011, is much higher
than average.
The BDC Index for the retail and wholesale trade sector was 0.21% in 2011, up from 0.14% in 2008. Over
the years, new entrepreneurial activity in this sector has been close to the national average. The share of self-
employed individuals with employees declined over the past year to reach 4.9% in 2011, but remains at a level
similar to the national average.
The health care and social assistance sectors have displayed lower levels of entrepreneurship dynamism, and
the same can be said about the manufacturing sector. Over the last two years, the number of new independent
workers with employees starting in manufacturing was too low to be reported. For the transportation and
warehousing as well as other service industries, the BDC Index could not be calculated because their samples
were too small to be statistically signi?cant.
1
In 2011, the industry
posting the highest score
in terms of new
entrepreneurial activities
was the construction
sector, and the BDC
Index reached 0.49%
that year.
Canadians operating
in the accommodation
and food services
industry are also
more entrepreneurial
than others.
Another dynamic
industry is professional
services.
1. BDC Index of “0” in the following graphs relate to the estimates that are removed (cannot be published) because they are below
the threshold of reliability.
NEW ENTREPRENEURIAL ACTIVITY
BY INDUSTRY 3.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 9
Figure 9: ENTREPRENEURIAL ACTIVITY – CONSTRUCTION
Figure 10: ENTREPRENEURIAL ACTIVITY – ACCOMODATION AND FOOD SERVICES
Figure 11: ENTREPRENEURIAL ACTIVITY – PROFESSIONAL SERVICES
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
11.19 10.94 10.16 10.09 11.70 11.61 11.20 11.12 10.45 10.09 9.58 9.57
BDC Index – Construction
0.60 0.52 0.52 0.53 0.45 0.65 0.64 0.56 0.62 0.51 0.49 0.49
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
6.88 5.82 5.75 6.34 6.27 6.56 5.40 5.87 5.49 5.27 4.91 5.13
BDC Index – Accomodation and Food Services
0.91 0.85 0.72 0.59 0.54 0.77 0.80 0.77 0.66 0.57 0.51 0.42
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
10.20 9.72 9.70 9.32 9.62 8.99 8.85 8.34 8.54 8.34 8.98 8.57
BDC Index – Professional services
0.54 0.55 0.42 0.34 0.44 0.47 0.48 0.51 0.23 0.37 0.37 0.38
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
0.90%
1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
8.00%
7.00%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 10
Figure 12: ENTREPRENEURIAL ACTIVITY – TRADE
Figure 13: ENTREPRENEURIAL ACTIVITY – HEALTH CARE AND SOCIAL ASSISTANCE
Figure 14: ENTREPRENEURIAL ACTIVITY – MANUFACTURING
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
6.70 6.16 5.95 5.69 5.86 6.09 5.85 5.56 5.24 5.50 5.13 4.86
BDC Index – Trade
0.40 0.38 0.27 0.34 0.36 0.26 0.33 0.26 0.14 0.19 0.24 0.21
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.50 3.76 3.73 4.05 3.87 4.03 3.72 3.50 4.00 3.52 3.38 3.76
BDC Index – Health Care and Social Assistance
0.10 0.15 0.10 0.00 0.12 0.24 0.09 0.00 0.18 0.16 0.12 0.24
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
2.46 2.52 2.46 2.40 2.50 2.65 2.73 2.81 2.96 2.90 2.91 2.69
BDC Index – Manufacturing
0.09 0.00 0.09 0.06 0.06 0.10 0.00 0.07 0.00 0.10 0.00 0.00
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
8.00%
7.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
0.00%
0.02%
0.04%
0.06%
0.08%
0.10%
0.12%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 11
Canadians aged 25 to 44 have a greater tendency to launch new businesses. However, while the BDC
Index for this age group has remained the highest during most of the period, it declined to 0.28% in 2011
from a peak of 0.40% in 2006. Furthermore, the share of employers within the labour force in this age
group has also declined and, at 3.5%, is now below the national average of 4.5%.
Entrepreneurial activity within the 45 to 54 age group decreased sharply during the recession but has
bounced back since. The BDC Index was 0.27% in 2011, very close to the 25 to 44 age category. The share
of self-employed workers with employees within this age group has dropped slightly but remains much
higher than the national average.
New entrepreneurial activity among Canadians age 55 or more traditionally has been and remains lower
than for the two previously-mentioned age groups. It also decreased during the recession, followed by a
bounce back, with a BDC Index of 0.17% in 2011. The labour force in this age category includes a much
larger share of employers than the average. However, it has decreased over the years.
Entrepreneurship among youth, between 15 to 24 years old, has been extremely volatile. Individuals in this
age category also account for the smallest proportion of independent workers with employees.
Figure 15: ENTREPRENEURIAL ACTIVITY – 15 TO 24 YEARS OLD
Canadians aged 25 to 44
have a greater tendency
to launch new
businesses. However,
while the BDC Index for
this age group has
remained the highest
during most of the
period, it declined to
0.28% in 2011 from a
peak of 0.40% in 2006.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
0.39 0.38 0.31 0.30 0.32 0.37 0.39 0.33 0.27 0.30 0.30 0.26
BDC Index – 15 to 24 years old
0.07 0.15 0.06 0.06 0.00 0.05 0.12 0.05 0.00 0.05 0.12 0.06
0.00%
0.02%
0.04%
0.06%
0.08%
0.10%
0.12%
0.14%
0.16%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
NEW ENTREPRENEURIAL ACTIVITY
BY AGE 4.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 12
Figure 16: ENTREPRENEURIAL ACTIVITY – 25 TO 44 YEARS OLD
Figure 17: ENTREPRENEURIAL ACTIVITY – 45 TO 54 YEARS OLD
Figure 18: ENTREPRENEURIAL ACTIVITY – 55 YEARS OLD OR MORE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.67 4.34 4.25 3.96 4.31 4.32 4.18 4.22 4.18 3.85 3.66 3.54
BDC Index – 25 to 44 years old
0.37 0.35 0.30 0.32 0.34 0.37 0.40 0.36 0.37 0.31 0.31 0.28
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
7.60 7.16 6.65 6.77 6.79 6.94 6.73 6.49 6.44 6.46 6.20 6.28
BDC Index – 45 to 54 years old
0.29 0.31 0.29 0.30 0.26 0.32 0.24 0.22 0.18 0.22 0.21 0.27
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
10.13 9.81 9.57 9.71 9.55 9.70 9.02 9.69 8.35 8.18 8.24 7.90
BDC Index – 55 years old or more
0.11 0.25 0.08 0.17 0.22 0.24 0.20 0.17 0.09 0.14 0.14 0.17
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
8.50%
9.00%
9.50%
10.00%
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 13
Looking at the BDC Index by gender leads us to conclude that entrepreneurship remains a male- dominated
environment. The BDC Index was much lower for women than men over the entire period, and reached
a historic low of 0.14% in 2011. Traditionally, the share of female employers within the labour force has also
been much smaller.
New entrepreneurial activity among men has experienced a decline since 2007 and, despite some
improvement, has not recuperated the ground lost in recent years. However, at 0.31% in 2011, the BDC
Index is two times higher for men than women. The share of male employers within the labour force has
decreased but remains above the national average.
Figure 19: ENTREPRENEURIAL ACTIVITY – WOMEN
Looking at the BDC
Index by gender leads
us to conclude that
entrepreneurship
remains a male-
dominated environment.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
3.05 2.74 2.75 2.65 2.77 2.86 2.84 2.70 2.63 2.53 2.46 2.59
BDC Index – Women
0.23 0.22 0.16 0.19 0.17 0.21 0.19 0.15 0.15 0.15 0.16 0.14
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
Figure 20: ENTREPRENEURIAL ACTIVITY – MEN
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
6.98 6.75 6.46 6.49 6.77 6.90 6.62 6.64 6.60 6.51 6.41 6.15
BDC Index – Men
0.35 0.36 0.32 0.32 0.34 0.37 0.37 0.35 0.31 0.29 0.29 0.31
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
NEW ENTREPRENEURIAL ACTIVITY
BY GENDER 5.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 14
We looked at whether there was a difference in the BDC Index between Canadian-born individuals
and immigrants. Statistics Canada began publishing data in this regard in 2006, a long enough period to
see a trend. The data shows that immigrants are much more entrepreneurial. While the BDC Index for
immigrants has been much higher for all years than for individuals born in Canada, the share of immigrant
employers within the labour force is also noticeably higher. In 2011, the BDC Index was 0.35% for
immigrants compared to 0.20% for non-immigrants. For both categories, entrepreneurial activity has
reduced since 2006, when the BDC Index was 0.47% for immigrants and 0.24% for non-immigrants.
Figure 21: ENTREPRENEURIAL ACTIVITY – IMMIGRANTS
The data shows that
immigrants are much
more entrepreneurial.
The BDC Index for
immigrants has been
much higher for all
years than for individuals
born in Canada.
2006 2007 2008 2009 2009 2011
Share of SE with employees in Labour Force
5.77 5.67 5.39 5.68 5.32 5.05
BDC Index – Immigrants
0.47 0.36 0.28 0.35 0.28 0.35
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
Figure 22: ENTREPRENEURIAL ACTIVITY – BORN IN CANADA
2006 2007 2008 2009 2009 2011
Share of SE with employees in Labour Force
4.62 4.57 4.56 4.38 4.37 4.34
BDC Index – Born in Canada
0.24 0.23 0.22 0.19 0.22 0.20
0.00%
0.10%
0.20%
0.30%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
NEW ENTREPRENEURIAL ACTIVITY
AMONG IMMIGRANTS 6.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 15
Canadians who decide to become employers in any given year constitute the pool of new
entrepreneurs in the country. Using Statistics Canada’s Labour Force Survey (LFS), BDC was
able to obtain this information and build an index of new entrepreneurial activity. This BDC Index
represents the proportion of individuals, within the labour force, who became independent
workers over the previous year AND had employees. Using the LFS allowed us to access
reliable and timely data for various periods and regions, including the different characteristics of
entrepreneurs.
In this report, we present the evolution of the BDC Index from 2000 until 2011. We also look
at the variation by region, industry, age group and gender as well as for immigrants. Overall, we
observed a reduction in the intensity of new entrepreneurial activity in recent years. Western
regions are more dynamic than Central or Eastern Canada. The sectors where Canadians have
a higher propensity to launch new ventures are construction, accommodation and food services,
and professional services. While most new entrepreneurs are in the 25 to 44 age group, older
citizens are now more likely to embrace entrepreneurship. Furthermore, men are much more
likely than women to become entrepreneurs. Finally, we found that immigrants are more
entrepreneurial than individuals born in Canada.
Canadians who decide
to become employers
in any given year
constitute the pool of
new entrepreneurs in
the country.
CONCLUSION
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 16
> Kauffman Foundation – Kauffman Index of Entrepreneurial Activity
The Kauffman Index
1
represents the percentage of the adult population (between ages twenty
and sixty-four) that starts a business each month. Individuals who, for the ?rst time, own
businesses as their main job, with ?fteen or more hours worked per week, are captured
by the Index. These monthly entrepreneurial activity rates are then averaged to calculate
an average monthly estimate for each year. The data source used is the Current Population
Survey (CPS), the U.S. equivalent of Canada’s Labour Force Survey. The Kauffman Index
captures all new business owners, including those who own incorporated or unincorporated
businesses and those who are employers or non-employers. In comparison, the BDC Index
excluded non-employers, considering that most of them are independent workers who may
not have the intention to build a ?rm.
> Global Entrepreneurship Monitor (GEM) – Total Early-Stage
Entrepreneurial Activity (TEA)
The TEA captures the percentage of adults between 18 and 64 years old who are actively
involved in setting up a business or are currently owner-managers of a new business (up to
three and a half years old). The TEA illustrates entrepreneurship at one point in time and the
data is based on surveys of 140,000 adults (18 to 64 years of age) in 54 economies. Based on
this survey, GEM estimated that 388 million entrepreneurs were actively engaged in starting
and running new businesses in 2011.The last time Canada was included in the GEM report
2
was in 2006.
> Fondation de l’entrepreneurship – Quebec Entrepreneurial Index
The Fondation de l’entrepreneurship developed and launched a survey which measures, in
a given year, the rate of the population involved in the entrepreneurial process.
9
It includes
the percentage of individuals who intend to start or take over a business and those that were
actively involved in creating a business in the past 12 months. The survey, conducted by Léger
Marketing, also measures the percentage of the population that owns a business and that
closed a business in a given year. In 2012, 8.0% of Quebecers intended to start or take over a
business, compared to 11.8% of residents of other provinces. In addition, 6.3% of Quebecers
had actively been involved in creating a business over the past year, as opposed to 8.8%
among other Canadians.
1. Kauffman Foundation, Kauffman Index of Entrepreneurial Activity 1996-2011, March 2011.
2. The GEM 2011 Global Report, January 2012.
3. Fondation de l’entrepreneurship, Indice entrepreneurial québécois 2012.
APPENDIX – OTHER
ENTREPRENEURSHIP MEASURES
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 17
> Statistics Canada – Firms “entries” from the Longitudinal
Employment Analysis Program (LEAP)
Statistics Canada studied ?rm dynamics in Canada using a longitudinal database, called the Longitudinal
Employment Analysis Program (LEAP), to follow ?rms through time and identify ?rms’ “entries”
1
.
This database included all ?rms in the Canadian economy that have some payroll and therefore issued
a T4-slip. LEAP includes all incorporated and unincorporated businesses but excludes self-employed
individuals. The data currently covers 1983 to 2008. For 2008, Statistics Canada estimated the
business entry rate was 10.8.
2
> OECD – Birth rate of employer enterprises
The OECD publishes measures of the birth rate of employer enterprises for a variety of countries.
Their employer enterprise birth rate corresponds to the number of births of employer enterprises
as a percentage of active enterprises with at least one employee. For Canada, the latest birth rate
published by the OECD
3
was 5.99%. The source for this data comes from Statistics Canada’s SME
Data Warehouse which includes ?rms having fewer than 250 employees and less than $50 million
in total revenue.
1. Firms’ “Entry rate” considers ?rms without employment in the previous year only, while ?rms’ “birth rate” considers new ?rms that have
no employment history at all.
2. Statistics Canada, Firm Dynamics: Firm Entry and Exit in Canada, 2000 to 2008, January 2012.
3. OECD, Entrepreneurship at a Glance, 2012.
doc_941889411.pdf
This detailed description related to bdc index of new entrepreneurial activity 2012.
BDC INDEX
OF NEW
ENTREPRENEURIAL
ACTIVITY
2
0
1
2
PIERRE MARTELL
PRESIDENT
MARTELL HOME BUILDERS
Executive Summary ----------------------------------------------------------------------------------- 2
Introduction -------------------------------------------------------------------------------------------- 3
1. New Entrepreneurial Activity in Canada --------------------------------------------------------- 4
2. New Entrepreneurial Activity by Region -------------------------------------------------------- 5
3. New Entrepreneurial Activity by Industry ------------------------------------------------------- 8
4. New Entrepreneurial Activity by Age ----------------------------------------------------------- 11
5. New Entrepreneurial Activity by Gender ----------------------------------------------------- 13
6. New Entrepreneurial Activity among Immigrants -------------------------------------------- 14
Conclusion ------------------------------------------------------------------------------------------- 15
Appendix – Other Entrepreneurship Measures ------------------------------------------------- 16
This research was prepared by the Research and Economic Analysis team from Marketing and
Public Affairs. Reliance on and use of this information is the reader’s responsibility.
Copyright © 2012 Business Development Bank of Canada
1 888 INFO BDC | bdc.ca
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 2
> The intensity at which entrepreneurs launch new ventures is a key indicator of economic
dynamism within a country, and an important driver of job creation and innovation. The
slow economic recovery and the impending impact of Canada’s aging population further
highlight the importance of entrepreneurial activity as a means to sustain our levels of
prosperity and standard of living.
> BDC created an Index of New Entrepreneurial Activity to provide up-to-date information
on where the greatest entrepreneurial dynamism resides in the country, and the
characteristics of new entrepreneurs.
> The Index measures, as a proportion of the overall labour force, the number of
Canadians who became independent workers and hired employees in the past year.
In 2011, 43,200 Canadians became self-employed and hired employees.
With 18,699,400 individuals in the labour force for the same period, the BDC Index
was 0.23% (43,200/18,699,400).
> Since the last recession, the BDC Index shows a reduced intensity of new entrepreneurial
activity in the country, both at the national level and in all regions. British Columbians are the
most entrepreneurial in the country, followed by individuals in the Prairies. Ontarians have
been the most reluctant to launch new ventures since the recession. The BDC Index in
Quebec has increased almost to the national level but remains lower than pre-recessionary
levels. The BDC Index for the Atlantic region is equal to the national average, although it
has dipped over the last two years.
> In 2011, industries posting the largest proportions of new entrepreneurs were construction
(BDC Index of 0.49%), accommodation and food services (0.42%), and professional
services (0.38%).
> Canadians aged 25 to 44 have a greater tendency to launch new businesses.
However, the BDC Index has steadily declined within this age group, while increasing
amongst older individuals.
> In general, women are less likely than men to become entrepreneurs. In 2011, the BDC
Index was 0.31% for men, more than double that for women (0.14%).
> Canadian immigrants have a higher tendency to launch new ventures than individuals born
in Canada. In 2011, the BDC Index was 0.35% for immigrants compared to 0.20% for non-
immigrants.
The intensity at which
entrepreneurs launch new
ventures is a key indicator
of economic dynamism
within a country.
BDC created an Index
of New Entrepreneurial
Activity to provide
up-to-date information
on where the greatest
entrepreneurial
dynamism resides in the
country, and the
characteristics of new
entrepreneurs.
Since the last recession,
the BDC Index shows
a reduced intensity of
new entrepreneurial
activity across the
country, both at the
national level and in all
regions.
EXECUTIVE SUMMARY
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 3
The intensity at which entrepreneurs launch new ventures is a key indicator of economic
dynamism within a country. It is also an important driver of job creation and innovation. The slow
economic recovery and the impending impact of Canada’s aging population further highlight the
importance of entrepreneurial activity as a means to sustain our prosperity and standard of living.
Timely information on the appearance of new ?rms in Canada is not easily available. Inspired
by the Kauffman Index of Entrepreneurial Activity
1
in the U.S., BDC decided to use a similar
methodology and create its own Index of New Entrepreneurial Activity. This Index measures the
yearly appearance of new independent workers who hire employees. It allows us to obtain
up-to-date information about individuals creating businesses in Canada.
The BDC Index is based on Statistics Canada’s Labour Force Survey (LFS).The LFS is a monthly
survey of a sample of 56,026 individuals who are 15 years old or more. With this, we have
access to recent data on the number of individuals who have become independent workers
within the past 12 months and who have employees working for them.
2
BDC’s Index of New
Entrepreneurial Activity measures new independent workers
3
with employees as a proportion of
the total labour force. For instance, in 2011, 43,200 Canadians became independent workers and
also hired employees, out of a total of 18,699,400 Canadians in the labour force.
4
That year, the
BDC Index of New Entrepreneurial Activity was therefore 0.23% (43,200/18,699,400).
This report presents the evolution of the BDC Index from 2000 to 2011. It compares the pre-
recession period with the economic crisis and subsequent recovery phase. The Index also looks
at how entrepreneurial trends vary by region, industry, age group, gender and for immigrants.
It allows us to obtain valuable insights on where the greatest entrepreneurial dynamism resides
in the country.
BDC’s Index of
New Entrepreneurial
Activity measures new
independent workers
with employees as a
proportion of the total
labour force. For instance,
in 2011, 43,200 Canadians
became independent
workers and also hired
employees, out of a total
of 18,699,400 Canadians
in the labour force. That
year, the BDC Index of
New Entrepreneurial
Activity was therefore
0.23% (43,200/18,699,400).
1. Kauffman Foundation, Kauffman Index of Entrepreneurial Activity 1996-2011, March 2011. The Kauffman Index captures all new business owners, including
those who are employers or non-employers. The Kauffman Index and other entrepreneurial measures are presented in Appendix 1.
2. We consider that these independent workers are in fact entrepreneurs, as opposed to those who work for themselves and do not hire employees.
3. In this study, the term “independent worker” is used as a synonym for “self-employed”.
4. Canadian Labour Force is composed of civilian workers or unemployed individuals actively looking for a job and who are 15 years old or more.
INTRODUCTION
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 4
NEW ENTREPRENEURIAL ACTIVITY
IN CANADA
Canadians who are independent workers (self-employed) and, in addition, hire employees, can be
considered as constituting the country’s pool of entrepreneurs. In 2011, 835,100 individuals had this status.
They accounted for 4.47% of the 18,699,400 Canadians in the labour force. Among those who were self-
employed, 43,200 people were new to the job, i.e., they had become independent workers within the
last 12 months and, at the same time, created jobs. Therefore, the proportion of new entrepreneurial activity
within the labour force was 0.23% that year (43,200/18,699,400). This constitutes the “BDC Index of New
Entrepreneurial Activity”.
In Figure 1 below, we observe that the BDC Index peaked in 2005, attaining 0.3%. It declined in subsequent
years and remained slightly lower than during the ?rst half of the last decade. In the same graph, we indicate
the share of all self-employed (SE) individuals with employees within the labour force. This includes recent and
older ones. We notice that this share increased over the past two years but remains lower than in some of the
previous years.
Based on these two indicators, the level of entrepreneurial activity is clearly not on an upward trend. What
is somewhat puzzling is that the BDC Index began to decrease even prior to the recession. One explanation
could be that the tight labour market we experienced during this period of solid economic growth did not
entice individuals to leave the labour market and launch new businesses. It also appears that the recession and
following slow economic recovery did not provide fertile ground for entrepreneurship.
Figure 1: 2000 TO 2011 TREND IN NEW ENTREPRENEURIAL ACTIVITY IN CANADA
The level of
entrepreneurial
activity is clearly not
on an upward trend.
It also appears that
the recession and
following slow
economic recovery
did not provide fertile
ground for
entrepreneurship.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.17 4.90 4.74 4.71 4.91 5.02 4.85 4.78 4.73 4.63 4.54 4.47
BDC Index – Canada
0.30 0.29 0.25 0.26 0.26 0.30 0.29 0.25 0.24 0.22 0.23 0.23
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
1.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 5
The national picture of new entrepreneurial activity hides various regional dynamics. In the Atlantic region, for
instance, the BDC Index is more volatile and generally holds above the national index. This was particularly true
during the recession. Overall, however, new entrepreneurial activity is on a downward trend and the share of
the labour force occupied by self-employed individuals with employees has decreased steadily over the years.
At 0.23% in 2011, the BDC Index for the Atlantic region is now equal to the national index.
Figure 2: ENTREPRENEURIAL ACTIVITY – ATLANTIC
In Quebec, both the BDC Index and the share of self-employed workers with employees have generally been
lower than the national average over the decade. At 0.23% in 2011, the BDC Index for Quebec reached the
national index; although still lower than its peak of 0.29% in 2001 and 2005.
Figure 3: ENTREPRENEURIAL ACTIVITY – QUEBEC
In the Atlantic region,
the BDC Index is more
volatile and generally
holds above the national
index.
At 0.23% in 2011, the
BDC Index for Quebec
reached the national
index, although still
lower than its peak of
0.29% in 2001 and 2005.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.75 4.42 4.84 4.56 4.65 4.64 4.59 4.37 4.31 4.16 4.12 4.02
BDC Index – Atlantic
0.33 0.29 0.33 0.25 0.30 0.27 0.30 0.23 0.28 0.29 0.24 0.23
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.28 4.87 4.40 4.33 4.55 4.83 4.53 4.51 4.35 4.24 4.38 4.24
BDC Index – Quebec
0.27 0.29 0.20 0.25 0.18 0.29 0.24 0.28 0.21 0.22 0.22 0.23
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
NEW ENTREPRENEURIAL ACTIVITY
BY REGION 2.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 6
New entrepreneurial activity in Ontario experienced a signi?cant decrease during the recession.
The BDC Index for this province dropped to a low of 0.17% in 2008. It recovered to 0.22% in 2011,
close to the national average. In the Ontario labour force, the proportion of self-employed workers
with employees remained slightly lower than the national average over the period.
Figure 4: ENTREPRENEURIAL ACTIVITY – ONTARIO
The levels of the BDC Index for the Prairies are in line with what we would expect from Canada’s most
dynamic economic region. Despite decreasing in 2009, the Index remained above the national average for
most of the period. From its 2006 peak of 0.38%, it reached a low of 0.22% in 2011. It has remained low by
historical standards over the last three years. It is also worth noting that the proportion of employers within
the labour force is generally higher than average.
Figure 5: ENTREPRENEURIAL ACTIVITY – PRAIRIES
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.86 4.55 4.47 4.53 4.76 4.50 4.43 4.52 4.60 4.49 4.20 4.23
BDC Index – Ontario
0.30 0.25 0.22 0.23 0.24 0.27 0.27 0.20 0.17 0.18 0.22 0.22
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.55 5.32 5.24 5.31 5.27 5.71 5.42 5.16 5.00 4.72 5.01 4.82
BDC Index – Prairies
0.29 0.31 0.24 0.31 0.27 0.31 0.38 0.32 0.31 0.23 0.25 0.22
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
New entrepreneurial
activity in Ontario
experienced a signi?cant
decrease during the
recession.
The levels of the BDC
Index for the Prairies
are in line with what
we would expect from
Canada’s most dynamic
economic region.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 7
Not surprisingly, British Columbia is the most entrepreneurial region in the country. Indeed, the BDC Index
for this province has evolved above the national average for most of the period. This is also re?ected by a
greater share of employers within the labour force than in other regions. These results are consistent with
other statistics showing that the number of small businesses per capita in British Columbia is the second
highest in the country, after Saskatchewan.
1
Figure 6: ENTREPRENEURIAL ACTIVITY – BRITISH COLUMBIA
To summarize, apart from British Columbians, most Canadians have been less entrepreneurial over the last
few years. Furthermore, new entrepreneurial activities have not picked up since the recession. The evolution
of the BDC Index shows that Ontario experienced the biggest slowdown of entrepreneurial dynamism during
the recession. Not surprisingly, citizens in the Prairies and B.C. have shown a greater propensity to create new
businesses.
The negative trends in new entrepreneurial activity have had an impact on the distribution of entrepreneurial
individuals across the country. From 2000 to 2011, Quebec’s share of entrepreneurs (self-employed individuals
with employees) decreased by 2 percentage points, as shown in the Figures below. During the same period,
the Prairies and British Columbia experienced an increase of one percentage point each in their respective
shares.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
5.61 5.72 5.51 5.21 5.65 6.23 6.07 5.74 5.62 5.82 5.40 5.29
BDC Index – British Columbia
0.33 0.41 0.37 0.30 0.42 0.39 0.29 0.29 0.37 0.32 0.26 0.27
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
Atlantic
6.6%
Quebec
24.0%
Ontario
36.6%
Prairies
18.6%
B.C.
14.2%
Atlantic
5.9%
Quebec
21.7%
Ontario
37.0%
Prairies
19.8%
B.C.
15.6%
Atlantic
6.6%
Quebec
24.0%
Ontario
36.6%
Prairies
18.6%
B.C.
14.2%
Atlantic
5.9%
Quebec
21.7%
Ontario
37.0%
Prairies
19.8%
B.C.
15.6%
Figure 7: SHARE OF SELF-EMPLOYED
WITH EMPLOYEES BY REGION – 2000
Figure 8: SHARE OF SELF-EMPLOYED
WITH EMPLOYEES BY REGION – 2011
1. Western Economic Diversi?cation, BC Ministry of Jobs, Tourism and Innovation, and BCStats, Small Business Pro?le 2011, p.7.
British Columbia is
the most entrepreneurial
region in the country.
Indeed, the BDC Index
for this province has
evolved above the national
average for most of
the period.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 8
In which sectors are Canadians most likely to launch new businesses? In 2011, the industry posting the highest
score in terms of new entrepreneurial activities was the construction sector, and the BDC Index reached
0.49%. While lower than the 0.65% level attained in 2005, it remained elevated compared to other industries.
In addition, within the labour force, the share of self-employed workers with employees was 9.7% in 2011,
much higher than the national average of 4.5%. However, this proportion has declined over the last few years.
Canadians operating in the accommodation and food services industry are also more entrepreneurial than
others. The BDC Index for this industry reached 0.42% in 2011, greater than the national average of 0.23%.
Nonetheless, it has experienced a signi?cant decline since 2006, the year it attained 0.80%. The share of
self-employed individuals with employees within the labour force, which has declined slightly, is now around
the Canadian average.
Another dynamic industry is professional services. The BDC Index reached 0.38% in 2011. While lower than
the 0.51% level reached in 2007, it is on an upward trend following its low of 0.23% in 2008. Furthermore,
the proportion of employers within the labour force has remained stable and, at 8.6% in 2011, is much higher
than average.
The BDC Index for the retail and wholesale trade sector was 0.21% in 2011, up from 0.14% in 2008. Over
the years, new entrepreneurial activity in this sector has been close to the national average. The share of self-
employed individuals with employees declined over the past year to reach 4.9% in 2011, but remains at a level
similar to the national average.
The health care and social assistance sectors have displayed lower levels of entrepreneurship dynamism, and
the same can be said about the manufacturing sector. Over the last two years, the number of new independent
workers with employees starting in manufacturing was too low to be reported. For the transportation and
warehousing as well as other service industries, the BDC Index could not be calculated because their samples
were too small to be statistically signi?cant.
1
In 2011, the industry
posting the highest score
in terms of new
entrepreneurial activities
was the construction
sector, and the BDC
Index reached 0.49%
that year.
Canadians operating
in the accommodation
and food services
industry are also
more entrepreneurial
than others.
Another dynamic
industry is professional
services.
1. BDC Index of “0” in the following graphs relate to the estimates that are removed (cannot be published) because they are below
the threshold of reliability.
NEW ENTREPRENEURIAL ACTIVITY
BY INDUSTRY 3.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 9
Figure 9: ENTREPRENEURIAL ACTIVITY – CONSTRUCTION
Figure 10: ENTREPRENEURIAL ACTIVITY – ACCOMODATION AND FOOD SERVICES
Figure 11: ENTREPRENEURIAL ACTIVITY – PROFESSIONAL SERVICES
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
11.19 10.94 10.16 10.09 11.70 11.61 11.20 11.12 10.45 10.09 9.58 9.57
BDC Index – Construction
0.60 0.52 0.52 0.53 0.45 0.65 0.64 0.56 0.62 0.51 0.49 0.49
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
6.88 5.82 5.75 6.34 6.27 6.56 5.40 5.87 5.49 5.27 4.91 5.13
BDC Index – Accomodation and Food Services
0.91 0.85 0.72 0.59 0.54 0.77 0.80 0.77 0.66 0.57 0.51 0.42
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
10.20 9.72 9.70 9.32 9.62 8.99 8.85 8.34 8.54 8.34 8.98 8.57
BDC Index – Professional services
0.54 0.55 0.42 0.34 0.44 0.47 0.48 0.51 0.23 0.37 0.37 0.38
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
0.90%
1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
8.00%
7.00%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 10
Figure 12: ENTREPRENEURIAL ACTIVITY – TRADE
Figure 13: ENTREPRENEURIAL ACTIVITY – HEALTH CARE AND SOCIAL ASSISTANCE
Figure 14: ENTREPRENEURIAL ACTIVITY – MANUFACTURING
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
6.70 6.16 5.95 5.69 5.86 6.09 5.85 5.56 5.24 5.50 5.13 4.86
BDC Index – Trade
0.40 0.38 0.27 0.34 0.36 0.26 0.33 0.26 0.14 0.19 0.24 0.21
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.50 3.76 3.73 4.05 3.87 4.03 3.72 3.50 4.00 3.52 3.38 3.76
BDC Index – Health Care and Social Assistance
0.10 0.15 0.10 0.00 0.12 0.24 0.09 0.00 0.18 0.16 0.12 0.24
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
2.46 2.52 2.46 2.40 2.50 2.65 2.73 2.81 2.96 2.90 2.91 2.69
BDC Index – Manufacturing
0.09 0.00 0.09 0.06 0.06 0.10 0.00 0.07 0.00 0.10 0.00 0.00
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
8.00%
7.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
0.00%
0.02%
0.04%
0.06%
0.08%
0.10%
0.12%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 11
Canadians aged 25 to 44 have a greater tendency to launch new businesses. However, while the BDC
Index for this age group has remained the highest during most of the period, it declined to 0.28% in 2011
from a peak of 0.40% in 2006. Furthermore, the share of employers within the labour force in this age
group has also declined and, at 3.5%, is now below the national average of 4.5%.
Entrepreneurial activity within the 45 to 54 age group decreased sharply during the recession but has
bounced back since. The BDC Index was 0.27% in 2011, very close to the 25 to 44 age category. The share
of self-employed workers with employees within this age group has dropped slightly but remains much
higher than the national average.
New entrepreneurial activity among Canadians age 55 or more traditionally has been and remains lower
than for the two previously-mentioned age groups. It also decreased during the recession, followed by a
bounce back, with a BDC Index of 0.17% in 2011. The labour force in this age category includes a much
larger share of employers than the average. However, it has decreased over the years.
Entrepreneurship among youth, between 15 to 24 years old, has been extremely volatile. Individuals in this
age category also account for the smallest proportion of independent workers with employees.
Figure 15: ENTREPRENEURIAL ACTIVITY – 15 TO 24 YEARS OLD
Canadians aged 25 to 44
have a greater tendency
to launch new
businesses. However,
while the BDC Index for
this age group has
remained the highest
during most of the
period, it declined to
0.28% in 2011 from a
peak of 0.40% in 2006.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
0.39 0.38 0.31 0.30 0.32 0.37 0.39 0.33 0.27 0.30 0.30 0.26
BDC Index – 15 to 24 years old
0.07 0.15 0.06 0.06 0.00 0.05 0.12 0.05 0.00 0.05 0.12 0.06
0.00%
0.02%
0.04%
0.06%
0.08%
0.10%
0.12%
0.14%
0.16%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
NEW ENTREPRENEURIAL ACTIVITY
BY AGE 4.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 12
Figure 16: ENTREPRENEURIAL ACTIVITY – 25 TO 44 YEARS OLD
Figure 17: ENTREPRENEURIAL ACTIVITY – 45 TO 54 YEARS OLD
Figure 18: ENTREPRENEURIAL ACTIVITY – 55 YEARS OLD OR MORE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
4.67 4.34 4.25 3.96 4.31 4.32 4.18 4.22 4.18 3.85 3.66 3.54
BDC Index – 25 to 44 years old
0.37 0.35 0.30 0.32 0.34 0.37 0.40 0.36 0.37 0.31 0.31 0.28
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
7.60 7.16 6.65 6.77 6.79 6.94 6.73 6.49 6.44 6.46 6.20 6.28
BDC Index – 45 to 54 years old
0.29 0.31 0.29 0.30 0.26 0.32 0.24 0.22 0.18 0.22 0.21 0.27
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
10.13 9.81 9.57 9.71 9.55 9.70 9.02 9.69 8.35 8.18 8.24 7.90
BDC Index – 55 years old or more
0.11 0.25 0.08 0.17 0.22 0.24 0.20 0.17 0.09 0.14 0.14 0.17
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
8.50%
9.00%
9.50%
10.00%
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 13
Looking at the BDC Index by gender leads us to conclude that entrepreneurship remains a male- dominated
environment. The BDC Index was much lower for women than men over the entire period, and reached
a historic low of 0.14% in 2011. Traditionally, the share of female employers within the labour force has also
been much smaller.
New entrepreneurial activity among men has experienced a decline since 2007 and, despite some
improvement, has not recuperated the ground lost in recent years. However, at 0.31% in 2011, the BDC
Index is two times higher for men than women. The share of male employers within the labour force has
decreased but remains above the national average.
Figure 19: ENTREPRENEURIAL ACTIVITY – WOMEN
Looking at the BDC
Index by gender leads
us to conclude that
entrepreneurship
remains a male-
dominated environment.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
3.05 2.74 2.75 2.65 2.77 2.86 2.84 2.70 2.63 2.53 2.46 2.59
BDC Index – Women
0.23 0.22 0.16 0.19 0.17 0.21 0.19 0.15 0.15 0.15 0.16 0.14
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
Figure 20: ENTREPRENEURIAL ACTIVITY – MEN
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Share of SE with employees in Labour Force
6.98 6.75 6.46 6.49 6.77 6.90 6.62 6.64 6.60 6.51 6.41 6.15
BDC Index – Men
0.35 0.36 0.32 0.32 0.34 0.37 0.37 0.35 0.31 0.29 0.29 0.31
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
NEW ENTREPRENEURIAL ACTIVITY
BY GENDER 5.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 14
We looked at whether there was a difference in the BDC Index between Canadian-born individuals
and immigrants. Statistics Canada began publishing data in this regard in 2006, a long enough period to
see a trend. The data shows that immigrants are much more entrepreneurial. While the BDC Index for
immigrants has been much higher for all years than for individuals born in Canada, the share of immigrant
employers within the labour force is also noticeably higher. In 2011, the BDC Index was 0.35% for
immigrants compared to 0.20% for non-immigrants. For both categories, entrepreneurial activity has
reduced since 2006, when the BDC Index was 0.47% for immigrants and 0.24% for non-immigrants.
Figure 21: ENTREPRENEURIAL ACTIVITY – IMMIGRANTS
The data shows that
immigrants are much
more entrepreneurial.
The BDC Index for
immigrants has been
much higher for all
years than for individuals
born in Canada.
2006 2007 2008 2009 2009 2011
Share of SE with employees in Labour Force
5.77 5.67 5.39 5.68 5.32 5.05
BDC Index – Immigrants
0.47 0.36 0.28 0.35 0.28 0.35
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
Figure 22: ENTREPRENEURIAL ACTIVITY – BORN IN CANADA
2006 2007 2008 2009 2009 2011
Share of SE with employees in Labour Force
4.62 4.57 4.56 4.38 4.37 4.34
BDC Index – Born in Canada
0.24 0.23 0.22 0.19 0.22 0.20
0.00%
0.10%
0.20%
0.30%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
NEW ENTREPRENEURIAL ACTIVITY
AMONG IMMIGRANTS 6.
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 15
Canadians who decide to become employers in any given year constitute the pool of new
entrepreneurs in the country. Using Statistics Canada’s Labour Force Survey (LFS), BDC was
able to obtain this information and build an index of new entrepreneurial activity. This BDC Index
represents the proportion of individuals, within the labour force, who became independent
workers over the previous year AND had employees. Using the LFS allowed us to access
reliable and timely data for various periods and regions, including the different characteristics of
entrepreneurs.
In this report, we present the evolution of the BDC Index from 2000 until 2011. We also look
at the variation by region, industry, age group and gender as well as for immigrants. Overall, we
observed a reduction in the intensity of new entrepreneurial activity in recent years. Western
regions are more dynamic than Central or Eastern Canada. The sectors where Canadians have
a higher propensity to launch new ventures are construction, accommodation and food services,
and professional services. While most new entrepreneurs are in the 25 to 44 age group, older
citizens are now more likely to embrace entrepreneurship. Furthermore, men are much more
likely than women to become entrepreneurs. Finally, we found that immigrants are more
entrepreneurial than individuals born in Canada.
Canadians who decide
to become employers
in any given year
constitute the pool of
new entrepreneurs in
the country.
CONCLUSION
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 16
> Kauffman Foundation – Kauffman Index of Entrepreneurial Activity
The Kauffman Index
1
represents the percentage of the adult population (between ages twenty
and sixty-four) that starts a business each month. Individuals who, for the ?rst time, own
businesses as their main job, with ?fteen or more hours worked per week, are captured
by the Index. These monthly entrepreneurial activity rates are then averaged to calculate
an average monthly estimate for each year. The data source used is the Current Population
Survey (CPS), the U.S. equivalent of Canada’s Labour Force Survey. The Kauffman Index
captures all new business owners, including those who own incorporated or unincorporated
businesses and those who are employers or non-employers. In comparison, the BDC Index
excluded non-employers, considering that most of them are independent workers who may
not have the intention to build a ?rm.
> Global Entrepreneurship Monitor (GEM) – Total Early-Stage
Entrepreneurial Activity (TEA)
The TEA captures the percentage of adults between 18 and 64 years old who are actively
involved in setting up a business or are currently owner-managers of a new business (up to
three and a half years old). The TEA illustrates entrepreneurship at one point in time and the
data is based on surveys of 140,000 adults (18 to 64 years of age) in 54 economies. Based on
this survey, GEM estimated that 388 million entrepreneurs were actively engaged in starting
and running new businesses in 2011.The last time Canada was included in the GEM report
2
was in 2006.
> Fondation de l’entrepreneurship – Quebec Entrepreneurial Index
The Fondation de l’entrepreneurship developed and launched a survey which measures, in
a given year, the rate of the population involved in the entrepreneurial process.
9
It includes
the percentage of individuals who intend to start or take over a business and those that were
actively involved in creating a business in the past 12 months. The survey, conducted by Léger
Marketing, also measures the percentage of the population that owns a business and that
closed a business in a given year. In 2012, 8.0% of Quebecers intended to start or take over a
business, compared to 11.8% of residents of other provinces. In addition, 6.3% of Quebecers
had actively been involved in creating a business over the past year, as opposed to 8.8%
among other Canadians.
1. Kauffman Foundation, Kauffman Index of Entrepreneurial Activity 1996-2011, March 2011.
2. The GEM 2011 Global Report, January 2012.
3. Fondation de l’entrepreneurship, Indice entrepreneurial québécois 2012.
APPENDIX – OTHER
ENTREPRENEURSHIP MEASURES
bdc.ca | BUSINESS DEVELOPMENT BANK OF CANADA BDC Index of New Entrepreneurial Activity | PAGE 17
> Statistics Canada – Firms “entries” from the Longitudinal
Employment Analysis Program (LEAP)
Statistics Canada studied ?rm dynamics in Canada using a longitudinal database, called the Longitudinal
Employment Analysis Program (LEAP), to follow ?rms through time and identify ?rms’ “entries”
1
.
This database included all ?rms in the Canadian economy that have some payroll and therefore issued
a T4-slip. LEAP includes all incorporated and unincorporated businesses but excludes self-employed
individuals. The data currently covers 1983 to 2008. For 2008, Statistics Canada estimated the
business entry rate was 10.8.
2
> OECD – Birth rate of employer enterprises
The OECD publishes measures of the birth rate of employer enterprises for a variety of countries.
Their employer enterprise birth rate corresponds to the number of births of employer enterprises
as a percentage of active enterprises with at least one employee. For Canada, the latest birth rate
published by the OECD
3
was 5.99%. The source for this data comes from Statistics Canada’s SME
Data Warehouse which includes ?rms having fewer than 250 employees and less than $50 million
in total revenue.
1. Firms’ “Entry rate” considers ?rms without employment in the previous year only, while ?rms’ “birth rate” considers new ?rms that have
no employment history at all.
2. Statistics Canada, Firm Dynamics: Firm Entry and Exit in Canada, 2000 to 2008, January 2012.
3. OECD, Entrepreneurship at a Glance, 2012.
doc_941889411.pdf