SME Profile: Ownership demographics statistics

From: Innovation, Science and Economic Development Canada

January 2020

Table of contents

Data

1. Introduction
2. Overview
3. Firm characteristics
   • 3.1 Firm size
   • 3.2 Industries
   • 3.3 Incorporation
4. Primary decision maker characteristics
   • 4.1 Age
   • 4.2 Education
5. Growth activities
   • 5.1 Firm age
   • 5.2 Growth
   • 5.3 Exporting
   • 5.4 Innovation
6. Conclusions

---

---

1 Introduction

Small and medium-sized enterprises (SMEs) play a key role in the Canadian economy. Between 2013 and 2017, for example, SMEs accounted for 85.3 percent of net job creation in the private sector, while in 2017 SMEs employed 89.6 percent of the private sector workforce (KSBS 2019).^{Footnote 2}

The demographics of SME owners are of considerable interest to policy-makers, particularly given the under-representation of certain groups, such as women or Aboriginal persons, among business owners. This report, based upon data collected in the 2017 Survey on Financing and Growth of Small and Medium Enterprises, presents demographic statistics for seven SME majority ownership types: SMEs majority owned by men, equally owned by men and women, majority owned by women, majority owned by Aboriginal persons, majority owned by visible minorities, majority owned by person(s) with a disability and majority owned by members of the same family (Table 1). The report is aimed primarily at providing a reference for data points of interest.

Table 1: Terms and definitions

Term	Definition
Majority ownership	More than 50 percent of a business' ownership
Men	Businesses majority owned by men
Men and women, equally	Businesses equally owned by men and women
Women	Businesses majority owned by women
Aboriginal persons	Businesses majority owned by Aboriginal persons, where Aboriginal persons are individuals who identify with at least one Aboriginal group (e.g., First Nations, Métis or Inuit)
Visible minorities	Businesses majority owned by visible minorities, where visible minorities are individuals, other than Aboriginal persons, who are non-white in colour/race
Person(s) with a disability	Businesses majority owned by person(s) with a disability, where disability refers to a limitation in kind or amount of a person's activity because of a long-term physical condition, mental condition or health problem
Members of the same family	Businesses majority owned by members of the same family
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.

2 Overview

In 2017, 63.5 percent of SMEs were majority owned by men and 15.6 percent of SMEs were majority owned by women, while 20.9 percent of SMEs were equally owned by men and women (Figure 1). Just over 40 percent of SMEs were majority owned by members of the same family, 12.2 percent by visible minorities, 1.4 percent by Aboriginal persons and 0.5 percent by person(s) with a disability.^{Footnote 3} Between 2007 and 2017, these proportions remained roughly unchanged, except for the percentage of SMEs majority owned by members of the same family, which has decreased substantially since 2007, when over 60 percent of employer SMEs were family owned.^{Footnote 4}

Figure 2 shows the distribution of the gender of majority ownership among SMEs majority owned by Aboriginal persons, visible minorities, person(s) with a disability and members of the same family. Roughly one quarter of SMEs majority owned by Aboriginal persons and of SMEs majority owned by visible minorities were also majority owned by women, compared with 15.6 percent of all SMEs.

Forty percent of SMEs majority owned by members of the same family were also equally owned by men and women; many of these businesses were likely owned by spouses or common-law partners.^{Footnote 6}

Figure 3 shows the proportions of SMEs whose primary decision makers were born within and outside Canada. The primary decision makers of 25.0 percent of all SMEs were born outside Canada. On average, these primary decision makers have resided within Canada for 27 years.

In contrast to the 25.0 percent of all SMEs whose primary decision makers were born outside Canada, 80.3 percent of SMEs majority owned by visible minorities and 40.0 percent of SMEs majority owned by person(s) with a disability had primary decision makers who were born outside Canada.

---

3 Firm characteristics

3.1Firm size

Figure 4 shows the size distribution of the seven majority ownership types and of all SMEs. In contrast to the 54.8 percent of all SMEs that had between 1 and 4 employees, 69.8 percent, 60.6 percent and 58.8 percent of SMEs majority owned by person(s) with a disability, women and visible minorities, respectively, were in this firm size group.

SMEs majority owned by person(s) with a disability were least likely to have between 5 and 19 employees, with 20.8 percent in this firm size group compared with 32.6 percent of all SMEs. By contrast, 38.5 percent of SMEs majority owned by Aboriginal persons had between 5 and 19 employees.

Just over 10 percent of all SMEs had between 20 and 99 employees, compared with 8.2 percent, 7.7 percent and 6.7 percent of SMEs majority owned by women, visible minorities and Aboriginal persons respectively.

SMEs majority owned by men were most likely to be medium-sized, with 2.3 percent having between 100 and 499 employees. By contrast, one percent or less of SMEs majority owned by women, visible minorities and person(s) with a disability were in this firm size group.

3.2Industries

Table 2 presents the industrial distribution of each majority ownership type^{Footnote 7} and of all SMEs.^{Footnote 8} Over 60 percent of all SMEs were found in the all other (19.8 percent), construction (16.4 percent), professional, scientific and technical services (14.4 percent) and retail trade (11.5 percent) sectors.

Table 2: Sectoral distribution by majority ownership type (%)

	Men (%)	Men and women, equally (%)	Women (%)	Aboriginal persons (%)	Visible minorities (%)	Person(s) with a disability (%)	Members of the same family (%)	All SMEs (%)
Industry
Agriculture	6.2	9.2	2.2	5.6	1.2	2.5	9.8	6.2
Construction	19.5	16.2	4.1	28.1	5.1	16.6	14.6	16.4
Manufacturing	6.2	5.1	4.5	5.5	3.8	1.1	6.0	5.7
Wholesale trade	5.8	4.7	3.0	1.8	5.0	1.0	4.9	5.1
Retail trade	9.6	12.4	18.0	16.6	13.5	2.3	12.2	11.5
Transportation and warehousing	6.8	4.6	2.6	4.7	8.3	4.6	5.9	5.7
Professional, scientific and technical services	15.2	12.4	13.8	11.8	18.2	26.2	13.0	14.4
Accommodation and food services	6.5	11.7	10.5	4.5	16.3	5.0	8.7	8.2
Other services	5.7	7.4	11.1	3.8	6.7	12.6	7.8	6.9
All other	18.5	16.2	30.3	17.7	22.0	28.1	17.1	19.8
Special industry aggregations
Tourism	3.0	5.2	4.9	2.3	6.4	2.3	4.0	3.8
Information and communication technologies (ICT)	4.1	4.7	2.8	1.1	6.8	11.4	4.1	4.0
Knowledge-based industries (KBI)	3.7	2.6	1.9	3.0	2.9	1.3	3.0	3.2
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017. Note: Totals may not add up to the sum of all categories due to rounding.

SMEs majority owned by men were less likely than all SMEs to operate in service-producing industries, and were more likely to operate in goods-producing sectors. For example, 19.5 percent, 18.5 percent and 9.6 percent of majority male-owned SMEs were in the construction, all other and retail trade sectors respectively.

SMEs equally owned by men and women were more likely than all SMEs to operate in the accommodation and food services, and agriculture sectors. SMEs equally owned by men and women tended to operate in the all other (16.2 percent), construction (16.2 percent), professional, scientific and technical services (12.4 percent), retail trade (12.4 percent) and accommodation and food services (11.7 percent) sectors.

Majority female-owned SMEs were more likely than all SMEs to operate in the all other and retail trade sectors, and less likely than all SMEs to operate in the construction sector. SMEs majority owned by women were concentrated in the all other (30.3 percent), retail trade (18.0 percent), professional, scientific and technical services (13.8 percent), other services (11.1 percent) and accommodation and food services (10.5 percent) sectors.

Majority Aboriginal-owned SMEs were more likely than all SMEs to operate in the construction and retail trade sectors. SMEs majority owned by Aboriginal persons most often operated in the construction (28.1 percent), all other (17.7 percent), retail trade (16.6 percent) and professional, scientific and technical services (11.8 percent) sectors.

SMEs majority owned by visible minorities were more likely than all SMEs to operate in the accommodation and food services sector, but less likely to operate in the construction and agriculture sectors. SMEs majority owned by visible minorities were most often found in the all other (22.0 percent), professional, scientific and technical services (18.2 percent), accommodation and food services (16.3 percent) and retail trade (13.5 percent) sectors.

SMEs majority owned by person(s) with a disability were more likely than all SMEs to operate in the professional, scientific and technical services; all other; and information and communication technologies sectors, and less likely to operate in the retail trade sector. Over 80 percent of SMEs majority owned by person(s) with a disability were found in the all other (28.1 percent), professional, scientific and technical services (26.2 percent), construction (16.6 percent) and other services (12.6 percent) sectors.

Majority family-owned SMEs were more likely than all SMEs to operate in the agriculture sector. SMEs majority owned by members of the same family were most often found in the all other (17.1 percent), construction (14.6 percent), professional, scientific and technical services (13.0 percent), retail trade (12.2 percent) and agriculture (9.8 percent) sectors.

3.3Incorporation

Figure 5 illustrates the rate of incorporation among the seven majority ownership types, along with the corresponding rate for all SMEs. Nearly 87 percent of all SMEs were incorporated, compared with 77.4 percent of majority female-owned SMEs.

---

4 Primary decision maker characteristics

4.1Age

In 2017, 20.1 percent of SMEs majority owned by women and 19.0 percent of SMEs majority owned by visible minorities had primary decision makers who were younger than 40 years of age, compared with 15.8 percent of all SMEs (Figure 6). By contrast, 9.0 percent of SMEs majority owned by person(s) with a disability had primary decision makers who were younger than 40 years of age.

The primary decision makers of 42.8 percent of SMEs majority owned by person(s) with a disability and 33.1 percent of SMEs majority owned by visible minorities were between 40 and 49 years of age, compared with 25.1 percent of all SMEs.

The primary decision makers of 46.8 percent of all SMEs were between 50 and 64 years of age. By contrast, the primary decision makers of 41.0 percent of SMEs majority owned by visible minorities and 29.9 percent of SMEs majority owned by person(s) with a disability were between 50 and 64 years of age.

In contrast to the 12.3 percent of all SMEs with primary decision makers 65 years of age or older, 18.3 percent of SMEs majority owned by person(s) with a disability had primary decision makers in this age category. Less than 10 percent of SMEs majority owned by women and SMEs majority owned by visible minorities had primary decision makers 65 years of age or older.

4.2Education

The primary decision makers of 39.3 percent of SMEs majority owned by person(s) with a disability and of 36.4 percent of SMEs majority owned by Aboriginal persons received a high school diploma or less as their highest level of education attained, compared with 30.1 percent of all SMEs (Figure 7). By contrast, the primary decision makers of 21.8 percent of SMEs majority owned by women and 20.6 percent of SMEs majority owned by visible minorities were in this education group.

SMEs majority owned by women and SMEs majority owned by Aboriginal persons were more likely than all SMEs to have primary decision makers with a post-secondary diploma or degree.

The primary decision makers of 22.9 percent of SMEs majority owned by visible minorities had a master's degree or above, compared with 15.1 percent of all SMEs. By contrast, the primary decision makers of 4.1 percent of SMEs majority owned by Aboriginal persons and 3.0 percent of SMEs majority owned by person(s) with a disability were in this education group.

---

5 Growth activities

5.1Firm age

Figure 8 shows the firm age distribution of the seven majority ownership types and of all SMEs. In 2017, 19.7 percent, 14.1 percent and 11.0 percent of SMEs majority owned by person(s) with a disability, visible minorities and women, respectively, were start-ups (i.e., began operating in 2015 or later), compared with 9.5 percent of all SMEs. Roughly one third of majority family-owned SMEs, SMEs majority owned by men and SMEs equally owned by men and women were well-established, having started operations in 1997 or earlier.

5.2Growth

Figure 9 shows average annual growth from 2015 to 2017 in sales or revenues.^{Footnote 9} Growth averaged 11 percent or more for 20.1 percent of all SMEs, compared with growth in this category for 14.6 percent of SMEs majority owned by Aboriginal persons and for 6.1 percent of SMEs majority owned by person(s) with a disability. Sales or revenues of 46.3 percent of all SMEs grew between 1 and 10 percent, compared with 58.3 percent of SMEs majority owned by person(s) with a disability. Proportions of firms with no growth or negative growth between 2015 and 2017 were similar across majority ownership types.

5.3Exporting

As shown in Figure 10, 11.7 percent of all SMEs exported goods or services in 2017, compared with 7.4 percent of SMEs majority owned by person(s) with a disability and 7.4 percent of SMEs majority owned by Aboriginal persons. Export propensities of other majority ownership types were similar to that of all SMEs.

5.4Innovation

Over one third of SMEs majority owned by person(s) with a disability, visible minorities and members of the same family introduced at least one innovation between 2015 and 2017, compared with 31.1 percent of all SMEs (Figure 11).^{Footnote 10}

Between 2015 and 2017, 23.0 percent of SMEs majority owned by visible minorities introduced at least one product innovation (a new or significantly improved good or service), compared with 19 percent of all SMEs (Table 3). Almost one quarter of SMEs majority owned by person(s) with a disability introduced at least one process innovation (a new or significantly improved production process or method), compared with 12.5 percent of all SMEs. SMEs majority owned by Aboriginal persons were more likely than all SMEs to introduce a new organizational method in their business practices, workplace organization or external relations (organizational innovation).

Finally, in contrast to 13.7 percent of all SMEs that introduced a new way of selling goods or services, 18.3 percent of SMEs majority owned by visible minorities introduced at least one marketing innovation.

Table 3: Introduction of at least one innovation between 2015 and 2017 by type of innovation and majority ownership type (%)

	Product	Process	Organizational	Marketing
Men	18.7	12.6	13.3	12.8
Men and women, equally	20.2	13.9	10.3	14.8
Women	18.9	10.0	13.1	15.9
Aboriginal persons	13.2	9.5	17.6	16.2
Visible minorities	23.0	13.5	11.9	18.3
Person(s) with a disability	16.5	24.3	8.2	8.9
Members of the same family	21.7	14.9	13.4	14.6
All SMEs	19.0	12.5	12.6	13.7
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.

6 Conclusions

This report, based upon data from the 2017 Survey on Financing and Growth of Small and Medium Enterprises, offers a reference for statistics on SMEs with majority ownership demographics of interest. These statistics can be used to better understand entrepreneurs who may be under-represented, such as SMEs majority owned by women, Aboriginal persons, visible minorities, person(s) with a disability and members of the same family.