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More start-ups, too many short-lived projects

While the COVID-19 pandemic has put a damper on the plans of many entrepreneurs who wanted to start their business in 2020, the number of start-ups in Quebec increased significantly in 2021, reaching a record rate of 17.6%. However, Quebec ranks behind the rest of Canada, which has a 20.8% start-up rate.

Posted at 6:30 a.m.

On a toujours eu l’impression that Québec était le fer de lance de l’entrepreneuriat au pays and that the milliers of Québécoise PMEs who feed l’activité économique faisaient contrepoids aux suscursales d’entreprises étrangères qui jouent le même rôle dans le reste from Canada.

The reality is quite different, as shown by an analysis carried out by professors Étienne St-Jean and Marc Duhamel from the SME research institute of the University of Quebec in Trois-Rivières (UQTR), associated with the UQTR School Directorate.

Since 2013, the UQTR Institute for Research in SMEs has been associated with the Global Entrepreneurship Monitor (GEM), which each year carries out an important comparative study on entrepreneurial dynamism in the world.

“GEM was created by the London School of Economics and brings together some 400 researchers from around the world. In Canada, we conduct an annual survey of 2,500 respondents, including 600 from Quebec,” explains Étienne St-Jean.

The GEM considers that a company is emerging when it is in the start-up stage until it has accumulated 42 months of paid wages, regardless of the number of employees.

Therefore, the year 2021 was a year of recovery for new start-ups in Quebec, as their number increased by 17.6%, compared to 12.1% in 2020. The rate of start-ups was 9 .5% in 2013, when the UQTR SME Research Institute began its collaboration with the GEM.

“Several entrepreneurs who planned to take the leap in 2020 postponed the execution of their project to 2021, which, in our opinion, allowed them to reach this record rate of 17.6%. This is a great boost”, underlines Étienne St-Jean.

The retail and service sectors were favored by many emerging entrepreneurs during 2021, the professor also observes.

This dynamism of new emerging entrepreneurs in Quebec is, however, lower than the rate of 20.8% registered in the rest of Canada.

“Since 2013, the rest of Canada has always been ahead of Quebec in terms of start-up rate in GEM analyses. When you think of the big oil companies in the West or in the automotive sector, there are many small companies that obtain subcontracts”, explains the researcher.

Despite the lower score for our new start-ups, Quebec still ranks favorably at 3me in the world ranking, behind Chile, in position 1Ahem range, Canada, in 2meand ahead of the United States and the other 24 OECD countries that are part of the ranking, which includes more than 40 countries.

The question of sustainability

The Global Entrepreneurship Monitor study also tells us that our emerging entrepreneurs are less aware of social and environmental issues than those in Canada and many other countries around the world.

Only 58.9% of our start-ups prioritize environmental and social impacts over profit compared to 68.8% in the rest of Canada. Québec is ranked 9me among the 24 OECD countries, while the rest of Canada ranks fifthme range.

However, emerging entrepreneurs in Quebec are more aware of the digital transformation of their activities than those in the rest of Canada, with 42% wanting to improve existing digital technologies compared to 25.6% of new entrepreneurs elsewhere. from Canada.

The main problem of the sustainability of the activities of the start-ups continues to be the one in which, in my opinion, the start-up entrepreneurs of Quebec have the highest rise.

Only a tiny 5.8% of start-ups will achieve established entrepreneur status, meaning their business will continue to survive after the crucial 42-month period of wages paid.

The vast majority of Quebec start-ups will either go out of business along the way or have their business taken over by someone else. Québec ranks 12thme ranks among the 24 OECD countries, while the rest of Canada ranks second with a rate of 8.9%.

Professor St-Jean points out, however, that Quebec has a very high acquisition rate of 44.3% compared to just 24.8% for the rest of Canada.

“Many Quebec start-ups have had to deal with labor shortages and rising wages, which no longer allowed them to be competitive. Many of those who kept a job while starting their business also preferred to stop their activities”, analyzes Professor St-Jean.

While it bodes well for Quebec to regain the dynamism that has long characterized it in terms of entrepreneurship, it would be far more desirable if this vitality were used to launch promising projects that last. The ephemeral never has a great future.


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