Karen Greve Young – CEO, Futurpreneur
I love shopping local, but lately I’m troubled by a frightening trend: three quarters of my favourite neighbourhood haunts are at risk of disappearing if we don’t recruit more young Canadians into entrepreneurship.
Over the next decade, 76% of small business owners in Canada will retire. The impact of these businesses can’t be overstated. Small businesses make up 98% of Canadian employers, contributing 10.7 million jobs to the economy and making our communities vibrant. Their impact also extends globally—small and medium businesses are responsible for over half of our country’s GDP.
The strength of our economy depends on how well we can support retiring owners’ transitions out of the workforce while ensuring that there’s a new generation of business leaders ready to take up the torch.
To be sure, this so-called “succession tsunami” will ripple waves of change across Canada’s Main Streets. Some businesses will shutter, and in doing so, they will make way for new businesses to emerge. Many others will change hands, inviting a new crop of business owners to contribute fresh capital and ideas for their growth and transformation.
The good news? We’re seeing that Gen-Z and millennials alike are increasingly interested in pursuing business ownership.
It’s a win-win situation, as long as we support the transition.
Here’s what it will take:
This generational changeover amounts to a $2 trillion opportunity for the incoming generation of aspiring entrepreneurs who may have never previously thought of buying a business.
Acquisition enables new owners to contribute their own ideas and creativity, but involves a lot less trial and error than launching a business from scratch. Meanwhile, financing can be more accessible for businesses with a proven track record.
Encouragingly, we’re seeing more programs tailored to supporting these transitions, including Futurpreneur’s new Owners Wanted initiative which helps young entrepreneurs explore the world of business acquisition and learn about funding options.
Strengthen side hustles
Many younger entrepreneurs are rejecting the notion that they need to choose between staying in their day job and launching their dream business.
The “side hustle” trend has re-emerged with a new level of sophistication and maturity.
My organization is receiving and approving more applications from entrepreneurs who are launching successful businesses alongside full-time employment. I’m optimistic that this trend will help to reignite Canada’s entrepreneurial community, allowing business owners to test the market and begin generating revenue before potentially giving up job security.
Deliver accessible financing
Rising costs and high inflation mean that—like everything—the cost of building or acquiring a business has gone up, too.
Loans that require equity to borrow against or a revenue track-record can be prohibitive barriers for many young founders, especially those from equity-deserving communities. Now, more than ever, it’s vital that entrepreneurs have access to loans that take into account other indicators of repayment, like the strength of the business plan and the credit history of the owner.
My organization provides non-collateralized loans to young entrepreneurs, and we’ve seen great success in offering accessible credit requirements to support entrepreneurs who would often not qualify for a business loan from a traditional lender.
Of the entrepreneurs we work with, 21 per cent say that they wouldn’t have been able to start a business without Futurpreneur’s support, while another 61 per cent say they would have had to move slower to launch their business, or would have sacrificed growth. These results demonstrate that accessible financing support is critical to ensuring that entrepreneurship is viable for the next generation.
Pass on critical expertise via mentorship
The business owners who are retiring today have so much vital experience to offer the next generation.
Having access to this experience by working with a committed mentor can influence a new entrepreneur’s chance of success. It’s why my organization ensures that every founder we support gets matched with a mentor as well as financing. In fact, one survey found that 70 percent of small businesses that received mentorship survived more than five years—double the survival rate of non-mentored businesses. In another survey, 92 percent of small business owners agreed that mentors have a direct impact on growth and survival. That’s because mentors can help new founders avoid costly mistakes and can offer mentees clarity on tricky strategic decisions, among other things.
I believe Canada’s entrepreneurial support network—from lenders, to incubators, to educational institutions—is well-equipped to support the next generation of business owners. Ensuring that this incoming generation is ready to answer the call will be the difference between growing Canada’s global competitiveness and thriving Main Streets across the country, or seeing a critical part of our economy decline. I know which outcome I’m hoping will prevail.
Karen Greve Young is the CEO of Futurpreneur, a national nonprofit dedicated to supporting entrepreneurs ages 18-39 with loan financing, mentorship and business resources.