Canada trails U.S. in new business ranking, says study

Canada is trailing the U.S. at encouraging more entrepreneurs and creating new businesses, according to a recent study released by Vancouver-based The Fraser Institute.

The study entitled, Measuring Business Creation in Canada and the United States, examines new business creation in all 50 U.S. states and 10 Canadian provinces. Business creation is essentially the process of starting new enterprises.

According to the study, Alberta is the highest ranked Canadian province, in the 11th place, with a net business creation rate of 2.4 per cent. Ontario is the second highest in Canada, at 21st place with a net business creation rate of 1.9 per cent, followed by British Columbia at 24th place.

Ahead of the Canadian provinces are such U.S. states as Nevada, Florida, Utah, Idaho, Montana, Virginia, Georgia, Missouri, Arizona and Delaware.

“Small and entrepreneurial businesses are key to creating new jobs, innovation and ultimately economic prosperity,” said Jason Clemens, resident scholar with The Fraser Institute and co-author of the report. “Consequently, states or provinces with a high level of new business creation are going to have more dynamic and faster growing economies.”

Newfoundland, Saskatchewan, Nova Scotia, New Brunswick and Prince Edward Island were at the bottom five of the 60 jurisdictions covered by the study, according to the report. In fact, except for Newfoundland, these provinces showed negative net business creation rates, which means they have actually lost some businesses, the study said.

The report noted that while governments at all levels have been instituting policies that encourage entrepreneurship, particularly those aimed at small businesses, little has been done to measure entrepreneurial activity to assess the effectives of relevant public policies.

“In recent years, governments have recognized the importance of small businesses and have begun instituting policies to encourage small business development and entrepreneurship,” Clemens said. “A province with a negative rate of new business creation clearly has not enacted the correct type of policies to encourage business or improve its economy.”

Overall, Canada lags behind its southern neighbour in the area of new business creation and the challenge for Canada, according to Clemens, is to develop policies that will encourage entrepreneurial activity.

Its ranking on The Fraser Institute study notwithstanding, the province of Nova Scotia recently announced over $783,000 in federal funding to help aspiring entrepreneurs in the province start their own business.

The funding was announced by Gerald Keddy, member of Parliament and parliamentary secretary to the minister of Atlantic Canada Opportunities Agency, on behalf of Nova Scotia’s minister of Human Resources and Social Development, Monte Solberg.

In a statement, Keddy said the funding will support community organizations that help unemployed individuals who would like to start their own business.

“Not only will this funding help people in Nova Scotia who are interested in contributing to the economy as entrepreneurs, but it will also benefit the local community,” Keddy said.

The federal grant will fund the Self-Employment Assistance program under the Centre for Entrepreneurship Education and Development (CEED) and will be delivered over two years. It will be used to provide income and entrepreneurial support to would-be entrepreneurs who are eligible for Employment Insurance as they start their own business.

The Self-Employment Assistance program is a 40-week endeavour that includes developing a business plan and participating in workshops on marketing, selling, accounting and other business skills. At the end of the program, participants are expected to start running their own business.

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Jim Love, Chief Content Officer, IT World Canada

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