The GEM Report for British Columbia 2021/2022

Executive Summary

The Global Entrepreneurship Monitor (GEM) Project is widely recognized as the most comprehensive study of entrepreneurship in the world. GEM offers a portrait of the individual entrepreneur in terms of attitudes, activities, and aspirations. It also allows for a more detailed demographic breakdown of how factors like age, education and gender play a role in entrepreneurial activity.

 

The GEM British Columbia (B.C.) Report highlights how British Columbia measures up regarding its entrepreneurial activity. The Report is based on 2021 data drawn from the GEM Adult Population Survey (APS) and collected during the middle of the COVID-19 pandemic. The Report refers to other GEM and government data to consider the effects of the pandemic on entrepreneurial activity.

 

Comparisons are made between B.C., three other provinces, Alberta, Ontario, Quebec, and the Canadian average. The Report includes a regional comparison between Metro Vancouver and Outside Metro Vancouver (e.g., rest of B.C.), based on postal codes as provided by APS respondents in 2021. A summary of key findings and Report recommendations are presented below.

Key Findings

The GEM B.C. Report finds generally favorable results on the state of B.C. entrepreneurship in 2021. Evidence from GEM data and government data sources suggests that the B.C. economy made a strong recovery from the effects of the coronavirus pandemic. Over half of B.C. adults agreed they have the skills and experience to start their own business.

 

While GEM data shows that British Columbians appear much more optimistic about starting a business in 2021 compared to 2020, over half of B.C. adults seeing good opportunities would be deterred by fear of failure. Entrepreneurs outside Vancouver are less deterred by the fear of failure but perceive fewer opportunities compared to Vancouver entrepreneurs.

 

B.C. has a high total entrepreneurial activity (TEA) level, which reflects a high level of early stage and start-up activity. However, B.C.’s established business (EB) level is comparatively lower, which suggests that a smaller proportion of start-ups are transitioning into established business.

 

B.C. shows the lowest rate of business exits but a high rate of business discontinuance as a proportion of exits. This suggests that B.C. entrepreneurs may be more reluctant to exit a business but when they do, the business is less likely to continue, compared to businesses in other provinces. Entrepreneurs outside Vancouver appear less likely to exit their business compared to those in Vancouver.

 

B.C. respondents also have a high percentage of ‘voluntary’ reasons for business discontinuation, with the most common reason being ‘an opportunity to sell the business.’ Given that B.C. has the lowest motivation level ‘to continue a family tradition,’ examining the factors influencing business exits and discontinuance may shed further light on potential gaps in business succession and succession planning.

 

GEM asked B.C. start-up entrepreneurs if they consider social and environmental implications of their business and prioritize social and/or environmental impacts above profitability or growth. B.C. start-up entrepreneurs scored low across all three sustainable development goal indicators compared to other provinces. This raises the question as to whether B.C.’s higher motivation ‘to build great wealth or very high income’ negatively affects attitudes towards sustainable development goals.

 

B.C.’s entrepreneurial activity appears to be increasing in the higher value extractive, transformative and business-oriented services sectors. However, the Report shows B.C. entrepreneurs with low to moderate growth aspirations, and less than half the Alberta level in high-growth aspirations (20+ jobs). A high proportion of B.C. businesses also appear more focused on servicing the local or domestic market, particularly those businesses outside Vancouver.

 

Finally, B.C. entrepreneurs and established businesses show a high level of developing products, services, technologies, and procedures that are not new to the country or the world, which may suggest they are adopting ideas transferred from elsewhere and/or are less involved in transferring home-grown technologies externally.

Recommendations

 

  1. Focus policy attention on family business ownership, succession, and ‘transgenerational’ entrepreneurship.

 

The Report finds that B.C. has the lowest motivation level ‘to continue a family tradition’ amongst comparators. Business discontinuance levels for B.C. were also identified as high. B.C.’s high percentage of older adults engaged in entrepreneurship identifies the critical role played by experienced entrepreneurs. Younger entrepreneurs have high growth ambitions but are challenged in transitioning to established businesses.

 

Further work is suggested to examine the factors influencing business exits and discontinuance amongst B.C. businesses. Government could consider playing a more prominent role in encouraging and supporting family business ownership and transgenerational entrepreneurship. This could include more peer mentoring on succession planning and identifying and recruiting entrepreneurial talent within and beyond the family.

 

Mentoring from experienced entrepreneurs, along with well-designed support programs, could greatly benefit new entrepreneurs with growth ambitions and attract others who see entrepreneurial opportunity in transitioning existing businesses.

 

  1. Provide more policy attention to B.C. entrepreneurs seeking growth through export.

 

B.C.’s established business rate remains less than half its early-stage entrepreneurial activity rate, which points to difficulties in transitioning B.C. start-ups into established businesses. The Report also finds that a high proportion of B.C. businesses are focused more on servicing the local or domestic market.

 

B.C. is identified as a strongly ‘export-oriented’ economy but needs to harness its export expertise to support the high level of B.C. entrepreneurs who are intending to start a business and who are seeking more opportunities in value-adding sectors.

 

  1. Address B.C.’s high ‘fear of failure’ level.

 

The Report finds that while over two-thirds of B.C. adults see good opportunities to start their own business locally, over half of those seeing good opportunities would be deterred by fear of failure. The fear of failure is a widespread obstacle to starting new businesses.

Government has a role to play in making entrepreneurs feel safe to take risks.

 

Some lessons from other countries are worth examining. Sweden, for example, leverages its social safety net and encourages and supports ‘born-global’ companies, given the country’s relatively small domestic market.

 

  1. Assist Entrepreneurs in Aligning Sustainable Development Goals with Entrepreneurial Ambitions

 

The Report found that B.C. start-up entrepreneurs scored low across all three sustainable development goal (SDG) indicators, with Vancouver start-up entrepreneurs scoring lower than entrepreneurs outside of Vancouver. This raises the question as to whether ambitious entrepreneurial goals, such as building wealth, are compatible with SDGs. Further study is suggested in exploring ways to assist entrepreneurs in aligning sustainable development goals with their entrepreneurial ambitions.