This article first appeared in the November 2012 issue of Life in Quebec Magazine
By Cynthia A. Sheehan, MBA, Chargée d’enseignement – entrepreneuriat, FSA Laval
For many of us, the thought of starting a business is a hidden dream. Sitting at your desk, you may think, “wouldn’t it be great to be your own boss, to do what you love.” Who among us has not thought of opening their own restaurant, or B&B, or of turning that hobby into a lucrative business? Well apparently, if you live in Quebec, only 23% of you have. But if you live in the rest of Canada, this rate jumps up to 49%. Another surprising fact: if you speak English in Quebec, you think about it a lot more than your French-speaking neighbour does. This is not the only thing that distinguishes entrepreneurship in Quebec City and in the province: lot’s of paperwork, a strong push towards community and non-profit organizations, and an ambivalent feeling about money and success. Let me take you on a tour of my province and my city and examine entrepreneurship in Quebec.
Entrepreneurship in Quebec: What Role Does Culture Play?
Quebec citizens create fewer businesses and demonstrate lower interest in entrepreneurship than in the rest of Canada. Every indicator used reveals weaker entrepreneurial activity in Quebec: from intention, to creation, to development. In an attempt to understand why that is, the Fondation de l’entrepreneurship conducts a yearly study on entrepreneurship in Quebec. In 2011, it explored, among other things, the relationship between entrepreneurship and language. It found that Francophones in Quebec are less interested in entrepreneurship than their English counterparts. French Quebeckers launch and own fewer businesses than Anglo Quebeckers do. Surprisingly, this gap between French and English-speakers does not exist in the rest of the country.
What is it about French-speaking culture in Quebec that turns people away from business? Well, there are many possible answers. One is a general attitude towards risk. Culturally, French Quebeckers are more risk averse. There is also a fear of failure. While Americans will celebrate those who are able to “rise from the ashes” – Donald Trump is a good example – Quebeckers tend to offer few second chances to those who fail. Anyone remember Raymond Malenfant? This difference in attitude mirrors the differences between two other parent cultures: Fear of failure is more than 30% higher in France than in the United Kingdom. The problem is entrepreneurs need to fail in order to get better. It is often the third and fourth venture that will lead to success. A lower risk tolerance and greater fear of failure are certainly obstacles to entrepreneurship.
In 2012, the Fondation explored the perception of the general population towards entrepreneurial activity. Surprisingly, they found that although a majority agree that entrepreneurship is important and is a good career choice, they also think that Quebec society does not agree. In other words, most people think: “It’s great to start a business and make money, but don’t say it too loudly because it is kind of frowned upon here.” This shows us that individual perception is changing. Let’s hope that the positive individual attitude towards entrepreneurship and entrepreneurs will eventually trickle down into the general culture. Things do look bright: today’s young adults are much more open to entrepreneurial activity than their parents. But then again, this is true in any culture: entrepreneurial intentions tend to decrease with age.
But another possible answer of Quebec’s lower business-creation rate is our love of non-profit organisations (NPO). Many French-speaking Quebeckers will turn to community organisations rather than private enterprise to realise their dreams. Our dance schools, local cafés, festivals, and even our bank are either a NPO or a co-operative. There are over 46,000 non-profit organisations in Quebec. That is 617 organisations for every 100,000 inhabitants, twice as many as in Ontario! The province of Quebec is also home to over 3,300 co-operatives, more than any other province. These organisations exist and create value and jobs, but do not appear in entrepreneurial statistics because nobody officially “owns” them. But they remain a viable alternative to traditional businesses. For example, co-operatives have better survival rates and tend to endure recessions more robustly than private enterprises.
Reduce Paperwork and Improve Funding!
What can be done to improve our entrepreneurial spirit and increase business creation? Well one answer may lie with the government. In a province-wide survey, entrepreneurs identified administrative bureaucracy as one of the major irritants and obstacles to launching a business. Nascent entrepreneurs seem to be drowning in paperwork. Despite repeated promises from government officials in the last 30 years to alleviate bureaucratic nuisances, few actions have been implemented and various ministries still demand their own set of forms and particular information from new businesses. Last year, the provincial government launched the Québec Entrepreneurship Strategy entitled “Go for it! All of Québec admires you”. Through a variety of new measures, the government hopes to improve entrepreneurial culture in the province and help business development. For example, entrepreneurship has been introduced into school curriculum and efforts have been made to facilitate the launching process. The Charest government even promised to spend $11M on a single-access portal for entrepreneurs and a reduction of paperwork. Will the new Marois government follow suit? One can only hope.
Another hurdle is access to financing. Venture capitalists are rare in the province and their range of expertise is thin. There have been some improvements in the last few years, but many start-ups still complain that they must move to the United States to get funding. The Quebec Entrepreneurship Strategy promises an additional $339M in funding for new businesses as well as facilitating funding from private investors.
Long seen as the quiet capital, home of too many civil servants and retirees, Quebec City is slowly changing its reputation. The election as mayor of the colourful Régis Labeaume, former director of the Fondation de l’entrepreneurship and staunch defender of all things entrepreneurial, is probably no coincidence to this change. Also, in recent years, the civil servant / private company job ratio has been reversed. There are now more jobs in Quebec City in the private sector than in the various public organisations. Furthermore, Lévis’ booming economy and vibrant younger population is exerting a growing positive influence on entrepreneurial attitudes in the region.
In 2010, Quebec City held an entrepreneurship forum “Québec, capital entrepreneuriale: rêve ou réalité” and followed with a study on the implementation of an entrepreneurial strategy for the city in 2011. A report by the Fondation notes that Quebec City is home to over 100 organizations aimed at encouraging entrepreneurial culture or aiding entrepreneurial development. 6 youth entrepreneurship agents, 5 entrepreneurial schools, numerous training programs and student entrepreneurial clubs work to instill an entrepreneurial culture in Quebec City’s youth. Entrepreneurs at the beginning of their foray into the world of business, on the other hand, can rely on numerous organizations, each promoting a specific type of support. 4 CLDs (Centre Local de Développement) in the region offer help with starting businesses that are in-line with the city’s priorities. The Fonds d’emprunt du Québec offers microcredit, the Corporation de développement économique communautaire supports projects in disadvantaged neighbourhoods, the Coopérative the développement regional Québec-Appalaches promotes the creation of co-operatives, the Carrefour jeuness-emploi supports young entrepreneurs, Entrepreneuriat Laval helps its university students, SAGE offers mentoring, the Centre de transfert d’entreprise de la Capitale-Nationale helps retiring entrepreneurs to transfer their businesses to a new generation and finally, Québec International aims to increase the international reach of Quebec City’s economy. Feel lost yet? Quebec City is a perfect example of the multiplication of forms and contact persons that annoy so many new entrepreneurs. Most of these organizations require information to be structured according to their own set of rules. City Hall is aware of the problem and is trying to coordinate efforts and information from each organization, but it will not be easy. Many organizations are directly under the supervision of the CLDs but others are independent.
And more programs/organizations are being created every year. Lately, the city has witnessed the creation of a whole slew of programs and funding for technology entrepreneurs. Microsoft Bizspark, FastTrac Techenture, Quebec Startup and Startup Canada all presented activities last year. Interest is also growing for the creation of a business accelerator. Let’s hope this does not add to the confusion.
I wouldn’t want to end this article on the impression that starting a business is hopelessly bureaucratic in Québec. The truth is that the city is home to many talented entrepreneurs that do not let a few forms get in the way of their dreams. In fact, many just bypass the system and give it a go on their own. Many entrepreneurs that I invite to speak at my entrepreneurship class at FSA Laval are grateful for the support they received. But they also warn students that those who rely too heavily on such support may end up feeling frustrated with the tedious process.
After all, entrepreneurs are known to be action-oriented and independent.
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