Promise and Prosperity:Promise and Prosperity:The Aboriginal Business SurveyThe Aboriginal Business Survey

Presented to:Aboriginal Entrepreneurs Conference and Tradeshow

Ottawa, ON

October 24, 2011

2

Agenda

• Project background

• Who are Aboriginal entrepreneurs?

• How are they faring?

• What are their challenges?

• What about EDCs?

• What does the future hold?

• Concluding thoughts and recommendations

4

Why does this research matter?

• Development of a strong business sector is essential to the future prosperity of Aboriginal peoples

• Aboriginal self-employment is on the rise

• Lack of current information

5

Research objectives

• Deepen our understanding: the successes, the opportunities and the challenges

• Determine goals and strategies used

• Identify key factors that contribute to growth and success

• For EDCs, address significant information gap

6

Methodology

Aboriginal Business Survey• Telephone interviews with 1,095 First Nations, Métis and Inuit small business

owners (100 employees or less)

• Survey field dates: September 10 to November 19, 2010

• National sample stratified by Aboriginal identity group, region, business type and size, based upon 2006 Census statistics

Survey of EDCs• 50 interviews with senior executives of Aboriginal EDCs

• Survey field dates: September 13. 2010 to January 18, 2011

7

Research Advisory Board

Leanne Belgarde, Potash Corp. of Saskatchewan

Dr. Susan Black, Intact Financial Corporation

Trevor Ives, Peter Ballantyne Developments Partnership Ltd.

Sonya Kunkel, BMO Financial Group

Nicole Ladouceur, Aboriginal Affairs and Northern Development Canada

Mary Jane Loustel, IBM Canada Ltd.

Jennifer Morse, Aboriginal Affairs and Northern Development Canada

Dr. Doug Norris, Environics Analytics

Dale Sturges, Royal Bank of Canada

Julie Tipene-O’Toole, Koori Business Network (Australia)

Karen Young, KB Jodan Inc.

8

CCAB thanks the generous supporters of the research:

Aboriginal Affairs and Northern Development Canada

Who are Aboriginal entrepreneurs?

10

Aboriginal small businesses are diverse

%

Aboriginal Identity*

Métis 49

First Nations 48

Inuit 2

Region*

Atlantic provinces 5

Quebec 10

Ontario 23

Manitoba 10

Saskatchewan 8Alberta 18British Columbia 22Territories 3

* Source: Statistics Canada 2006 Census

11

Aboriginal small businesses are diverse (continued)

%

Sector*

Primary 13

Construction 18

Manufacturing 10

Wholesale, retail trade 9

Professional services 27

Arts, entertainment, food 12

Other services 11

Have clients in...

Local community 85Other parts of territory/provinces 73Other territories/provinces 48United States 26Countries outside Canada/U.S. 18

* Source: Statistics Canada 2006 Census

How are they faring?

13

Aboriginal entrepreneurs are realizing business success

61%Net profit

for 2010

35%Increased revenues

2009-2010

14

They are also succeeding in ways beyond the bottom line

Extremelysuccessful

Verysuccessful

Somewhatsuccessful

Not verysuccessful

Not at allsuccessful

dk/na

12

3740

7 2 2

Based on your own personal objectives for your business, how successful do you feel your business has been to date?

15

They report other advantages to small business ownership

Advantages of being a small business ownerTop mentions

16

Success is distinguished by the use of business plans and innovation

High success

Low success

Formal business plan in place 33% 19%

Innovation in past three years New products/services 55% 22% New processes 42% 20%

17

They are creating jobs for Aboriginal and non-Aboriginal people

37%

of Aboriginal small businesses have

employees*

On average:62% are Aboriginal

38% are non-Aboriginal

* Source: Statistics Canada 2006 Census

What are their challenges?

19

Heavy reliance on personal financing to start up businesses

dk/na

Other

No financing

Business loans/credit from creditunions or caisses populaires

Personal credit cards

Loans or equity from friends/family

Personal loans from a bank, creditunion or caisses populaire

Loans from Aboriginal business lending institutions

Credit from other government programs(INAC or Aboriginal Business Canada)

Business loans/credit from bank

Personal savings 55

17

17

15

8

3

3

2

2

4

6

Main sources of financing used to start up your business

20

Their own resources are also a main source of on-going financing

Importance of current sources of financingVery or somewhat important

Government grants and loans

Aboriginal lending agencies and capital corporations

Personal loans or lines of credit from financial institutions

Business loans or lines of credit from financial institutions

Retained earnings

Personal savings 75

74

62

55

52

51

21

Access to financing and equity are considered obstacles to growth

Obstacles to growing business over next two yearsTop 2 box on 5-point scale

Trade regulations/exchange rate

Availability of skilled labour

Government policy, rules/regulations

Infrastructure (internet access, telephone, electricity, water, roads)

Cost of borrowing

Cost of doing business, input costs

Competition

Access to equity or capital

Access to financing

Overall economic conditions 46

43

38

38

38

37

36

34

33

15

22

Few have access to valuable business guidance or advice

Individuals or organizations who have been particularly important in providing guidance/advice about your business

23

A minority have used government programs

Government programs used to start-up/maintain business

What about EDCs?

25

Who are they?

• Small, but long-term and growing

o 68% are small businesses (less than 100 employees)

o 72% in business for 10 years or more

o 68% report revenue of $1 million or more

o 54% report revenue growth from previous year

26

Community-wide benefits are part of their definition of success

“These [projects] have been very successful. And we have invested these monies into the communities – daycares, recreational facilities, radio station, poverty fund, sports. Close to $100 million has been put into this infrastructure.”

27

EDCs identify two key challenges

What does the future hold?

29

Aboriginal entrepreneurs are optimistic about the future

71%Anticipate revenue growth in next two

years

71%Likely still running business in five

years

30

EDCs are similarly confident about the future of their organizations

78%Anticipate revenue

growth over coming year

66%Plan to increase

capital investments in 2011

Concluding Thoughts

32

Summary

• Aboriginal businesses are creating opportunities

• Key challenges:

o Inadequate access to financing and equity/capital

o Workforce issues (EDCs)

o Limited advice/guidance (private entrepreneurs)

33

CCAB Recommendations

Improve access to

capital

Provincial & municipal

procurement strategies

Develop & implement

business plans

Build stronger networks