entrepreneurship immigrant entrepreneurship

Entrepreneurship Challenges: Financing

For any business owner, the challenges are many – marketing, business growth, profitability and (amongst others) the ever-present challenge of financing. While financing can be a challenge to existing businesses, particularly those looking to expand, in this blog entry I’d like to examine how it impacts start-ups.

Prior to coming to OIN, I spent nearly 7 years in the financial services industry. While I focused heavily on insurance and investments, I did spend a significant amount of time with mortgages and leasing. I was in the industry during a very interesting time, the beginning of this economic shift or recession. All throughout I also managed to see how financing has changed and what it means for business owners.

It seems that these days money is free flowing for tech startups that may have weak (or no) revenue models. Quite simply, millions of dollars are being poured into products that may or not pan out. Of course, the ones that do are phenomenal successes, but these high stakes gambles lead me to ask what about everyone else?

The recent startup visa seems to be geared towards these gambles. While the start-up visa does not specify tech, it is most likely that hi-tech will be the main beneficiary of these venture capital funds. Again, while some of these multi-million dollar projects may create a few jobs, many tend to be short-lived, or absorbed by larger entities. Some may be shelved entirely with their assets stored away to pad a portfolio of patents. Long-lasting benefits to our communities, and are economies as a whole just tend not to happen as a result of these projects.

On the other side, we see small “Ma and Pa” type businesses that require long work hours, have capital needs of their own, and (the successful ones) tend to generate jobs and value for their local communities. These businesses tend to stick around over the long-term, diversify the local economy, and really form the bread and butter of our national economy – in the past 10 years, almost 60% of our new jobs were created by small companies like these. How much do these ventures require?

Many were started with less than $10,000. There succession does require significantly more financing, yet still far less then what the latest App may need, and with far less risk of failure. These are the types of businesses that we need, and unfortunately we are not finding effective ways to give them the capital that they need.

Within my work at OIN, I am constantly looking at ways that immigrants & newcomers can finance business succession opportunities. While traditional lending may work for some, it may not work for all. Sometimes an individual may not be deemed credit worthy, maybe the business is too risky, or some other factor influences. Regardless, there are likely cases where good businesses cannot start, expand or continue because of this barrier.

We are examining several different ways to counter these effects; first, by working with lenders to understand the challenges and potential rewards involved in these transactions. By using the mentorship component of our business succession program, we can reduce the risk to lenders by tapping into the tacit knowledge of experienced entrepreneurs.

Second, we are looking at exciting new finance models. Crowd funding and social impact bonds certainly top the list, although I am sure that new instruments will be created as the economy forces more of us into entrepreneurship and as traditional lending tightens. While it may sound silly, and possibly limiting today, the days of raising equity through a website $10 at a time are likely not far off. And, if our legislation catches up to that of the U.K., we may see Social Impact Bonds becoming a feasible instrument for transitioning businesses.

I hope this will not be taken as an attack on banks; I deal with them in personal and professional life, and without them economic growth would be at a standstill. However, I do feel that we need to look at new models if the old models cannot sold old problems. Please feel free to leave your comments and thoughts on any of these points.

success stories

Success Stories – Shawn Lee, Pantry Mart

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Success Stories – Shawn Lee, Pantry Mart – Aylmer, Ontario

During our research, I had the pleasure of interviewing several successful immigrant entrepreneurs. The first was Shawn Lee. Shawn is a South Korean immigrant who successfully manages the Pantry Mart in Aylmer Ontario.

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You can view the YouTube video below to learn more about Shawn’s story:

immigrant entrepreneurship

Immigrant Entrepreneurship – A Boost for our Communities

immigrant entrepreneurshipLast year, over 250,000 newcomers choose Canada as their new home. Often these newcomers flock to centres such as Vancouver, Montreal and Toronto. While these cities certainly offer diverse communities and a multitude of newcomer services, they may also be contributing to a substandard experience.

A recent study showed that Toronto was the most miserable city in Canada, and this was due in large part to the high proportion of immigrants. This is not to say that immigrants make others and themselves miserable, but rather that there is a mismatch between immigrant expectations and outcomes, particularly in larger centres. Each year, we actively seek the best and brightest from developing nations, and only a small percentage are able to find opportunities that match their skill sets.

Refereed to sometimes as “Taxi Driver Syndrome” many foreign trained professionals end up in low-skilled jobs. As newcomers adjust to their new lives in large cities, they often become entrenched in ethnic enclaves and from there, the integration process is seriously hampered. Credential recognition is an ongoing issue, and few fields allow for an easy transition into a career that is aligned with a newcomer’s past experience. We see this across all regulated professions, and across all ethnicities. However, there is one unregulated profession that does not care about your ethnicity or where you obtained your credentials: entrepreneurship.

Many immigrants come to Canada seeking a better life, and often they turn to entrepreneurship to do so. Why? Because if they have the business accumen, courage and the right idea, they need not be limited in what they can achieve.

Newcomers are naturally risk takers, having given up so much to come to a new country. Poverty, persecution and even death are just some of the risks faced by many immigrants. The risk of business failure is likely miniscule in comparison, and with the motivation to create a new life, immigrants are clearly an excellent source of new entrepreneurs.

Check back later this month for more on why immigrant entrepreneurship is just the boost that our communities need.