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The Future ofEntrepreneurshipin Canada 2021Taking the pulse of Canada’s currentand aspiring small business owners1

What’s insideAbout the survey What the state of entrepreneurshiplooks like in CanadaThe study, conducted leveraging the AngusReid panel on behalf of Intuit QuickBooksCanada, was completed by 2,006 Canadians,nationally representative of the Canadianpopulation. Among the total sample, 589Canadians identified as entrepreneurs,defined as having undertaken one or moreentrepreneurship initiatives (i.e., starting abusiness, whether formally incorporatedor not, as a primary means of income orsupplementary means of income, and asstarted alone or with others), and 247 identifiedas aspiring entrepreneurs, defined as notyet having undertaken an entrepreneurshipinitiative, but considering it in the next 2 years.The estimated margin of error for the totalsample is /- 3% at a 95% confidence level. Thestudy took place online from April 14 -19, 2021. The impact of COVID-19 on smallbusiness owners Motivations and barriers toentrepreneurship How entrepreneurs are embracinge-commerce and digital tools What opportunities entrepreneurs seeto better support their success2

The future of entrepreneurship in Canada is brightSmall businesses are the backbone of the Canadian economy, whichmeans entrepreneurship is an important factor that shapes theeconomic growth of the country. Powering prosperity for Canadiansmall businesses is at the heart of what we do at Intuit QuickBooks,and although COVID-19 has undoubtedly disrupted the lives ofCanadians, with disruption often comes opportunity.To better understand how Canadians are adapting to this new world,we wanted to get a sense of the state of entrepreneurship in Canadaas we look towards economic recovery.It’s exciting to see that the entrepreneurial spirit in Canada is aliveand well. As our survey reveals, entrepreneurship has continued togrow since the beginning of COVID-19, both because of and in spiteof the challenges it presented. Among Canadian entrepreneurs, onein five (21%) started their business within the past year. To put that inperspective, that represents close to two million Canadians – morethan the population of Calgary.Of course, we can’t ignore the challenges that remain. While money isa major motivator for entrepreneurs, it’s also a point of concern,especially among Gen Zs and Millennials. Beyond financialchallenges, being an entrepreneur is stressful. It can de-prioritizework-life balance and be mentally and emotionally draining.From funding and financial management resources to better supportfor mental health, entrepreneurs need our support. There’s a clearopportunity for the private sector, government and even non-profitsto partner with Canada’s entrepreneurs and drive our economicrecovery forward, together.David MarquisVP & Country Manager of Intuit CanadaMany of these entrepreneurs are embracing digital, from sellingonline to using digital marketing tools to take their businesses to thenext level. You have probably witnessed firsthand as neighbourhoodbusinesses have pivoted to survive, from restaurants pivoting to mealkit delivery to small brick-and-mortar retailers diving intoe-commerce.As you’ll see in this report, Canadian entrepreneurs are optimisticabout the future and at QuickBooks, we are too. Not only is runningone’s own business personally rewarding, but a culture of growingentrepreneurship has a positive impact on our economy and society.3

The state of entrepreneurshipin CanadaCanada has an entrepreneurial spirit. In fact, 98% of businesses in Canada aresmall businesses. Our survey reveals that a third of Canadians are currentlyentrepreneurs or have undertaken an entrepreneurial endeavor in theirlifetime. COVID-19 sparked even more entrepreneurship in Canada, with newbusinesses emerging in the wake of an extraordinary disruption.1 in 5Canadian entrepreneurs startedtheir business within the past year.That’s close towithentrepreneurs in Canada,starting their business during COVID-19.9 million 2 millionCOVID-19 created both challenges and opportunities for entrepreneurshipin Canada. Stay-at-home orders and rolling closures affected many smallbusinesses and created financial pressures. At the same time, a boost inspare time and the need to find new sources of income also prompted someCanadians to start their own businesses on the side or full time.4

Why businesses started upin the last year39%23%15%had more spare timedue to COVID-19.faced financial pressuresfrom COVID-19 (19% frombeing laid off).Gender, generation, and geography all play a role in Canada’sentrepreneurial makeup. Men have been more likely than womento have taken on starting a new business in their lifetime.34%VSof Canadian men havetaken on an entrepreneurialendeavor25%of Canadianwomen have taken on anentrepreneurial endeavorWho started up?saw an unmet needin the market.It’s not a surprise that older Canadians – Gen Xers and BabyBoomers – are more likely to have been entrepreneurs in theirlifetime. However, Gen Zs and Millennials are more likely tohave started their business within the past year.Many of Canada’s entrepreneurs, especially those who started upin the past year, consider their endeavors to be side businesses.Canadian entrepreneurs considertheir entrepreneurship initiative tobe a side business.72%who started in the lastyear say theirs is a sidebusiness.44% Gen Zand Millennials25%Gen X7% BabyBoomers5

“Before COVID-19 hit, our game storeoperated as brick and mortar only.Flash forward to today, we’ve jumpedfeet first into digital and our onlinestore has redefined our businessmodel and how we approach selling.“– ANDREA ROBERTSON, Rain City Games6

The future ofentrepreneurshipis digitalHelping businessesget onlineCurrent and aspiring entrepreneurs are putting more effort into e-commerce.Along with brick-and-mortar businesses pivoting to selling their productsonline, we’re also seeing more entrepreneurs emerge as online sellers.The shift to selling online is moreOverall, Canadian entrepreneurs are more oriented towards selling servicesover products, and lean towards consumers as their customers, rather thanother businesses, though some do sell to both.get small businesses online through72%of entrepreneurssell services and43% sell products.79%sell to consumers,while 44% sell toother businesses.important than ever before. We joinedforces with Digital Main Street to helpthe development of e-commercestorefronts and we are committed tofinding new and innovative ways tosupport the growth and prosperity ofsmall businesses.Learn moreWhile 41% of Canadian entrepreneurs sell exclusively offline, more sellonline, and 22% sell through both channels. Among the businesses startedup over the past year, 3 in 4 sell online, and over half sell exclusively online.59%of entrepreneurssell online.37%sell online only.7

Aspiring entrepreneurs are also more likely to focus their attention online.4 in 5aspiring entrepreneurs plan to selltheir products or services online.Female entrepreneurs are the most likely to sell exclusively online, whileyounger generations are also most likely to sell online.Who’s selling online only?FemaleGen. Z/MillenialMaleGeneration XBaby Boomers42% female entrepreneursonline vs. 34% of males.49% of Gen Z and Millennialentrepreneurs vs. 38% of Gen Xand 31% of Baby Boomers.Along with selling online, entrepreneurs are also generally comfortableusing digital tools to manage and build their businesses.What digital tools are entrepreneurscomfortable using?67%say digitalmarketing64%say digitalbanking tools62%say digital communication solutions8

However, entrepreneurs are generally less comfortable when it comesto financial management software.41%feel comfortable usingfinancial managementsoftware.An opportunityfor easier financialmanagementWhile Canadian entrepreneurs are provingto be savvy with digital marketing andcommunications, they have an opportunityto modernize how they use digital tools for31%financial management. Many entrepreneursof aspiring entrepreneurs arecomfortable using financialmanagement software.are leaning on desktop tools and offlineprocesses, instead of cloud-based services,which are often more streamlined, savingtime and money.Only a third report using an accounting service or professional. With thedesire to handle finances independently, but a gap in comfort, there’san opportunity for entrepreneurs to build their knowledge of digitalfinancial management tools.1/3of entrepreneurs reportusing an accountingservice or a professional.At QuickBooks, we use our AI-poweredplatform and deep customer insight to buildproduct innovations that empower our smallbusiness owners. Ultimately, our vision is forQuickBooks to be the source of truth for yourbusiness. A single integrated platform toaddress your needs.Learn more9

“Being a restaurant owner has been anuphill battle over the past year. Becauseof COVID-19, we’ve had to find new waysto pivot and get in front of our customers– through food delivery and social mediamarketing. Now, the community I’vecreated through channels like Instagramare my support system.”– JENNIFER FOSTER,CW Coops Angus10

COVID-19’s impacton entrepreneursWhile COVID-19 has prompted new businesses to emerge, it undoubtedlyhad an impact on existing business owners – although in some cases, it ledto positive growth. Half of entrepreneurs over 55 reported that COVID-19did not affect their business, compared to just a third of Gen Z andMillennials and 36% of Gen X entrepreneurs.50%of entrepreneursover 55 reported thatCOVID-19 did notaffect their business.1/3of Gen Z andMillenials reportedthat COVID-19 did notaffect their business.36%Gen X entrepreneursreported thatCOVID-19 did notaffect their business.3 in 5entrepreneurs say that COVID-19 hasaffected their business in some way.11

How COVID-19 affected businesses25%paused or closedtheir business.18%scaled backtheir business.16%grew theirbusiness.13%pivoted theirbusiness.As a result of COVID-19, business owners have had to adjustfinancially and in their personal lives.61%How all entrepreneurs* are making sacrifices1 in 4have been workinglonger hours.1 in 5have taken onmore debt.Despite the challenges,COVID-19 has also influencedhow entrepreneurs arethinking about work.1 in 5have foregone apersonal salary.55% of entrepreneurshave begun rethinkingtheir careers.How entrepreneurs are rethinking workof entrepreneurssay they have hadto make sacrifices.64% have a greaterdesire for multipleincome streams.59% want morework-life balance.56% want morejob security.Among entrepreneurs over 55, 16% have even delayedretirement. However, younger entrepreneurs are more likelygenerally to have made sacrifices like working longer hours,spending less time with family and taking on debt.55% want topositively contributeto society.53% are motivatedto find new ways togrow their business.53% have a greaterdesire to work forthemselves.*These stats include entrepreneurs overall, not Gen Z or Millenials specifically.12

“This past year has been a challenge.Running a company, being a mom andbeing a teacher to my two girls leaves noroom for work-life balance. But, everythingI do is for them – they are my motivation.”– KIM WEST, Kids Swag Co13

What’s drivingentrepreneurs now?While money is the number one driving force for entrepreneurship,freedom and flexibility also push entrepreneurs.What’s motivating entrepreneurs?68%56%58%50%say earningmoneysay being theirown bosssay setting theirown hourssay doing something meaningfulMoney is also the top motivator across generations, but youngerentrepreneurs are more likely to seek out creative freedom and thechance to have a positive impact on the world around them.14