Statistics Canada has released a survey on immigrants doing business in Canada, their preferences, financing and impact on the country’s economy. Here is the portrait of a typical foreign-born entrepreneur.
The survey points out the positive impact of immigrant entrepreneurship on Canada’s economic growth: the newcomers start businesses, create new jobs, lower the average age of the labour force, and drive innovation.
The share of business ownership
According to the statistics, the immigrants are more inclined to build their own business than the locals. Around 6% of immigrants who had been in Canada for 10 to 30 years own a private incorporated company with employees compared to less than 5% of people born and raised in Canada. However, immigrants’ companies tend to be smaller than those belonging to Canadian-born owners.
The share of self-employed immigrants stands at 10.8% — much higher than the percentage of the Canadian-born persons earning income from own business or profession (7.5%). The analysts explain this fact by the inability of immigrants to find a good job. The rate of self-employed driven by the lack of job opportunities is higher among immigrants (33%) and recent immigrants (40%) than among the Canadian-born (20%).
A portrait in data of a typical business immigrant
Education plays the part in the willingness to start own business: more highly educated immigrants tend to choose entrepreneurship more often.
The country of the origin, on the other hand, is almost of no significance at all. The only exceptions are Latin America and Africa: the descendants from these regions are less likely to open their own business.
People aged between 45 and 54 are more likely to get involved in entrepreneurship — the experts are explaining this fact by the relative financial stability and higher experience of this age group. The inclination for business is lower among the recent immigrants, but it tends to increase with years of living in Canada.
Another factor of distinction is gender. According to the study, male immigrants are twice as likely to be company owners than foreign-born women.
Immigrant entrepreneurs come from all categories
Immigrant entrepreneurs choose among different immigration programs. There are four classes of immigrants:
- Economic class
- Business class
- Family class
- Refugees
As could be expected, the highest share of business owners is among business-class immigrants (25%). However, it is a small class, and firms owned by business immigrants account for only about 10% of all immigrant-owned companies.
Economic- and family-class immigrants, as well as refugees, tend to become business owners in equal measure: the share of entrepreneurs stands at 14–15% across the three classes. Family-class immigrants and refugees account for about 44% immigrant-owned companies, and the economic class accounts for 40%.
What types of businesses do they choose?
The main difference between economic and family classes or refugees is not their inclination for opening a firm, but the type of business they own.
Economic-class immigrants (as wells as the Canadian-born) are more likely to own a private incorporated company. Also, they choose mainly between the knowledge-based industries and professional services (for instance, engineering and science-based manufacturing, telecommunications, data processing, computer systems design and consulting services), and less often between retail trade and catering services.
Business-class-immigrants, on the other hand, are likely to choose from more traditional sectors such as wholesale and retail trade, and catering services. A large proportion of business-class self-employed are in real estate leasing — this sector is far more popular among this class compared to other immigrant classes as well as the Canadian-born. The report also highlights that very few of the business-class immigrants own companies in the knowledge-based sector.
Family-class immigrants have a great number of self-employed in child care services, and refugees more often stay self-employed getting involved in retail trade, taxi driving and other kinds of ground transportation, as well as in catering and cleaning services.
How long-lasting immigrant businesses are?
On average, immigrants stay business owners approximately the same amount of time as the Canadian-born. About 80% of immigrant owners of private companies keep their businesses two years after opening a firm, and 58% continue to maintain business even after seven years. However, recent immigrants’ businesses have a shorter survival time.
Business financing and common obstacles
Statistics show that immigrants and Canadian-born finance their business operations in a similar way. Personal financing is the most common-used source. However, recent immigrants are less likely to use bank loans for start-up financing.
Applications for financing submitted by immigrants are approved as often as those made by the Canadian-born business owners.
According to the survey, access to finance is a less important obstacle for both immigrant and Canadian respondents compared to the other factors as rising costs of inputs, increasing competition and fluctuations in consumer demand.