RBC: The micro-entrepreneur economy survey

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[00:00] SPEAKER_00: Welcome to Countless Podcast.
[00:05] SPEAKER_00: Hello, I'm Mario Toneguzi with Countless Podcast. Joining me today is Don Ledlow, who is
[00:11] SPEAKER_00: Vice President of Small Business, Business Financial Services Strategy and Partnerships for
[00:17] SPEAKER_00: RBC. Thanks for joining us today, Don. Thanks, Mario. Great to be here.
[00:23] SPEAKER_00: Well, let me just start. We're going to talk a little bit today about a recent survey
[00:28] SPEAKER_00: and poll that RBC did regarding small business and small business owners. Before we get
[00:35] SPEAKER_00: into that, I just want to ask a little bit about yourself. What's your role there at RBC
[00:40] SPEAKER_01: and what's your background? Sure. Well, thanks. So I'm the Vice President for Small Business
[00:47] SPEAKER_01: and BFS Strategy, so I'm responsible in particular for our Small Business segment, which is
[00:52] SPEAKER_01: a critically important segment for RBC and the Canadian economy as a whole. And then
[00:58] SPEAKER_01: I also help it with our broader Business Financial Services Strategy. So really, how do we help
[01:03] SPEAKER_01: all business owners cross Canada being at RBC for about 20 years? Most of that time is
[01:09] SPEAKER_01: being in business and commercial banking, a lot of it in client-facing roles and right
[01:15] SPEAKER_01: on in the headquarters. So all kinds of different ways I've spent over the years helping entrepreneurs
[01:20] SPEAKER_01: and business owners and I just love to work. All right. So you, as you've mentioned, you've
[01:26] SPEAKER_00: got a big history of what the entrepreneurial entrepreneurial community. When you looked at
[01:33] SPEAKER_00: some of these survey results that came out from the recent poll you guys did, what were some
[01:41] SPEAKER_00: of the key things that struck you from these results? Yeah, I think one thing really stood
[01:48] SPEAKER_01: out and over the pandemic we certainly saw a rise in interest in entrepreneurialism. I think
[01:54] SPEAKER_01: that this survey in particular, what really stood out, if you gave it a headline, it would be the
[01:58] SPEAKER_01: rise of the micro entrepreneur. And really, this growing interest in people to start, I know
[02:05] SPEAKER_01: a very small nimble business, but sometimes we refer to as a side hustle for a variety of reasons
[02:11] SPEAKER_01: and just a growing interest amongst a majority of Canadians in that. So tell me, you know, how would
[02:17] SPEAKER_00: you describe that? Like what is a micro entrepreneur and how small, I guess it's going to be one person,
[02:27] SPEAKER_01: right? Yeah, sure. Often just starts with the one person and do it on the side. So they would
[02:33] SPEAKER_01: have perhaps a regular source of income and they're testing a new idea and getting it going and
[02:38] SPEAKER_01: trying to dive into entrepreneurialism and business ownership. And you know, that said,
[02:44] SPEAKER_01: there's a lot of different, I think, reasons for that in this particular moment in time, many of
[02:49] SPEAKER_01: which are understandable. I think Canadians told us a huge part of this is inflation and the
[02:56] SPEAKER_01: rising cost of living. So, you know, 74% of entrepreneurs or business owners, with people thinking
[03:03] SPEAKER_01: of starting a business, cited the rising cost of living and inflation as a main motivation behind
[03:09] SPEAKER_01: that and then actually increased to 84% for Gen Z and millennials. And I think too, there's some
[03:16] SPEAKER_01: other things that have made it easier to start up a micro business or a small business. It's
[03:23] SPEAKER_01: easier to be an entrepreneur because of all the many digital solutions that are there now that
[03:28] SPEAKER_01: can make it quick and simple. I'm very cost effective to start and run a business. And I think
[03:35] SPEAKER_01: there's tremendous support right now across Canada for local businesses and small business owners.
[03:42] SPEAKER_01: So a lot of things that play here that are causing people to start up these little side
[03:47] SPEAKER_01: hustles, probably hoping to throw them into a main business someday.
[03:51] SPEAKER_00: Now, when you mention them as being side hustles, I presume a lot of them, and probably the
[03:57] SPEAKER_00: majority of them, are something that someone is really interested in. Something they have
[04:03] SPEAKER_01: passion about, right? I think almost always, yeah. And in fact, you know, that's a common thread
[04:09] SPEAKER_01: most many business owners that I've encountered over the years is there's just something that
[04:14] SPEAKER_01: they're interested, a problem to solve and opportunity. So something clearly that they're excited
[04:19] SPEAKER_01: and passionate about. And, you know, I think the pandemic, while, you know, I would never underestimate
[04:26] SPEAKER_01: the real challenges that created for so many people and business owners as well.
[04:32] SPEAKER_01: However, it also gave a lot of people a chance to pause and reflect and think of new opportunities
[04:39] SPEAKER_01: or maybe a pivot of it on the path that they're on. And so I think that has also helped us
[04:45] SPEAKER_01: spur a lot of entrepreneurialism, just new opportunities that people see and, you know, a sense of
[04:51] SPEAKER_00: like, hey, why not now? You know, for the entrepreneur in general, you know, I know that I've heard and
[04:59] SPEAKER_00: talked to a number of people that, you know, it's entrepreneurship is doing well in the sense that
[05:07] SPEAKER_00: there's a lot of interest still out there for it, despite all the challenges. And that's why I'm
[05:13] SPEAKER_00: curious about, despite all the challenges, you know, that you've got rising costs, you've got supply
[05:18] SPEAKER_00: chain as you've got interest rates, you know, all this type of lack of labor, you know, all these
[05:26] SPEAKER_00: challenges there. But yet there is the appeal for entrepreneurship. Why is that?
[05:35] SPEAKER_01: Yeah, you know, it seems a big counterintuitive, doesn't it? That's a new current environment people
[05:40] SPEAKER_01: are saying, like, hey, I got an idea. Let's start our business. I think there's a bunch of things
[05:44] SPEAKER_01: behind that when you dive into it. For example, eight in 10 Canadians that we surveyed cited the
[05:51] SPEAKER_01: fact that one income is not enough in their opinion to achieve all the things that they wanted.
[05:57] SPEAKER_01: So, you know, that's a financial incentive to start something on the side. And then maybe help
[06:04] SPEAKER_01: hope that that grows into something broader. So in fact, 77% of Canadians are thinking, yeah,
[06:11] SPEAKER_01: I'd like it to start small, but hopefully it could grow into being my main support someday. So
[06:21] SPEAKER_01: you know, and I think that while it is a very challenging environment, you know, there were a lot of
[06:29] SPEAKER_01: things that the pandemic became a catalyst for. And one of them is a digitization of many
[06:33] SPEAKER_01: aspects of business and reaching customers and all that. So in some ways, I think it's also
[06:41] SPEAKER_01: become a lot easier for people to actually envisage themselves and actually execute on being a
[06:47] SPEAKER_01: small business owner. And this is particularly prevalent, perhaps not surprisingly amongst 10
[06:52] SPEAKER_00: millennials and Z as well. All right, super. You did mention a little bit, Don, about technology.
[07:00] SPEAKER_00: Maybe we can talk a little bit more about that and elaborate more on the fact that, you know,
[07:07] SPEAKER_00: what the role is of technology in this day and age to enable, well, first of all, to enable
[07:13] SPEAKER_00: businesses to start up and to get going and then be to support them while they're up and running.
[07:20] SPEAKER_01: Yeah, a couple of ways to think about that. You know, the first is just the incredible acceleration
[07:26] SPEAKER_01: of e-commerce and the ability that that gives small businesses a chance to go global. So, you know,
[07:35] SPEAKER_01: you can reach pretty much anyone in the world now, quickly and efficiently through e-commerce.
[07:42] SPEAKER_01: You know, I think also the ability to work online or work remotely or work from home and be very
[07:50] SPEAKER_01: flexible in your work arrangements, as also spurred a bit of entrepreneurialism. And again, I think that
[07:57] SPEAKER_01: it's not just e-commerce, but you know, the rise of digital solutions. There's so many tools
[08:03] SPEAKER_01: of their digital tools right now that can really simplify the operation of a small business,
[08:08] SPEAKER_01: whether that's managing your expenses, handling your shipping, managing your inventory,
[08:13] SPEAKER_01: digital payments and all kinds of ways of moving money around. So, you know, technology is really
[08:20] SPEAKER_01: a strong, undercurrent of this whole rise of entrepreneurialism, I believe.
[08:24] SPEAKER_00: Yeah, I think that a lot of people really don't give the technology, the credit, as do right now,
[08:31] SPEAKER_00: in terms of some of the business aspects of growth. And, you know, you mentioned,
[08:37] SPEAKER_00: you know, the ability to hit global markets. And I'm just thinking, you know, even for myself,
[08:44] SPEAKER_00: personally, you know, I'm doing work now for people that are in Montreal or in Toronto or in Vancouver,
[08:53] SPEAKER_00: you know, I'm based in Calgary. But that's the opportunity that gives the micro-antroponera as
[09:01] SPEAKER_00: well, right? The ability to expand beyond their geographical location.
[09:08] SPEAKER_01: Yeah, and I think, you know, it really streamlines and enables a lot of things that perhaps
[09:15] SPEAKER_01: you might rather not spend your time on. If you're a passionate entrepreneur, you want to
[09:19] SPEAKER_01: spend every waking moment on the things that, you know, give you the most delight in everything. So,
[09:24] SPEAKER_01: I think technology is an enabler to allow people to do that and focus more on their customers
[09:30] SPEAKER_01: and their business and the things that they really got into business for.
[09:34] SPEAKER_00: Let's talk a little bit about consumers. Obviously, we've been through a couple of very interesting
[09:41] SPEAKER_00: years to put it lightly. Lots of changes in consumer behavior and preferences and how they shop
[09:50] SPEAKER_01: and buy things. What impacts that had on entrepreneurs? Yes, well, so as we've had this sort of strong
[09:58] SPEAKER_01: desire of those Canadians to start a business, we've also, on the receiving end of that,
[10:04] SPEAKER_01: had a really welcoming environment for entrepreneurs amongst the Canadian population.
[10:08] SPEAKER_01: Very strong local support. 71% of Canadians say they want to support and will support with
[10:16] SPEAKER_01: their spending dollars, small local businesses. So, significant amount of community support.
[10:22] SPEAKER_01: I think there's also a belief that small businesses innovate more rapidly and are better to
[10:29] SPEAKER_01: adopt a change. And we certainly saw that in the pandemic where entrepreneurs and small
[10:34] SPEAKER_01: business owners had to pivot overnight in hours and did. That's not to downplay the challenges
[10:43] SPEAKER_01: they face, but it really spurred a ton of innovation and pragmatism and really showed their resiliency.
[10:49] SPEAKER_01: And I think also Canadians believe that small businesses props are just better at customizing and
[10:55] SPEAKER_01: tailoring their solutions and getting to know you. So, a very welcoming environment for small
[11:01] SPEAKER_01: business owners and entrepreneurs all across Canada right now. So, Don, why did RBC conduct this
[11:08] SPEAKER_01: survey? As I said, we're passionate about businesses. For me and particular small businesses,
[11:16] SPEAKER_01: we really believe it's the engine of the Canadian economy. And so, because that's important to us,
[11:23] SPEAKER_01: we like to talk to entrepreneurs and understand what's going on their mind so that we can help them
[11:27] SPEAKER_01: understand where they're at and be right there with them. So, we run these surveys periodically
[11:33] SPEAKER_01: and just understand where they're at, bit of a pulse check. And this little recent one has been
[11:40] SPEAKER_00: been very revealing, I think. Well, let's talk a little bit about RBC. Obviously, known for
[11:47] SPEAKER_00: its banking services, but when it comes to entrepreneurs, tell me what else is available
[11:52] SPEAKER_00: and what resources are in place for entrepreneurs to tap into?
[11:58] SPEAKER_01: Yeah, sure. All kinds of ways that we can help entrepreneurs and small business owners. And I
[12:03] SPEAKER_01: think a great place to start if you're thinking about starting a microbusiness or a business of
[12:08] SPEAKER_01: your own is the RBC Small Business Navigator site, which is an online site that's got a wealth
[12:14] SPEAKER_01: of tools and resources and insights and guides that can help you think through and start up
[12:23] SPEAKER_01: a business. And then, once you've decided you want to take the plunge,
[12:28] SPEAKER_01: I would suggest that you check out owner, which is O-N-W-O-W-N-R. And it's an application that allows
[12:37] SPEAKER_01: you to register and incorporate a small business in a very short period of time, a really economical,
[12:43] SPEAKER_01: fast and efficient and easy to do so it can get you started really quickly. And then once you're
[12:49] SPEAKER_01: up and running, we've got a bunch of other tools. One that I really love is RBC Insights Edge,
[12:54] SPEAKER_01: which once you're up and running it can help you understand so much about your existing
[13:00] SPEAKER_01: customers and where you can find more like them. So great, great insights to help you grow your
[13:05] SPEAKER_00: business. I guess that's all really important right for an entrepreneur because sometimes
[13:12] SPEAKER_00: the challenge of being an entrepreneur can be a little daunting and overwhelming to think
[13:19] SPEAKER_00: about all this other stuff. And quite frankly, you probably don't have much of a business background,
[13:26] SPEAKER_00: you have an idea, I'm going to sell this widget. And so having those resources and play really,
[13:34] SPEAKER_01: gives you a little bit of peace of mind, right? I think so and I think I would add talking to people.
[13:44] SPEAKER_01: Whether you're thinking of starting up a business or if you're a small business owner already,
[13:49] SPEAKER_01: it can be a bit lonely, you can seem a bit daunting and running a small business is challenging
[13:55] SPEAKER_01: on the best of days. But you never have to go to loan. And so I think it's important to talk to
[14:01] SPEAKER_01: people out there and build a network almost like an informal advisory council whether that's
[14:07] SPEAKER_01: local small business owners, companies that are like you, your lawyer, your accountant,
[14:13] SPEAKER_01: other people, your customers. And of course, we love to talk to business owners and entrepreneurs
[14:18] SPEAKER_01: at RBT. So I've here to cover some to talk to you come by and see us as well. We love to have a
[14:23] SPEAKER_00: chat with you. Well, speaking of daunting, obviously, depending on what industry you're in and what
[14:29] SPEAKER_00: business you're doing, it can be very challenging going up against the quote unquote big guys,
[14:37] SPEAKER_00: right? You know, some of these major companies and we won't mention them by names, but
[14:43] SPEAKER_00: you know, what advice would you give a smaller entrepreneur in terms of meeting the challenges of
[14:54] SPEAKER_00: competition from the big guys and especially in these rising cost environment days?
[15:00] SPEAKER_01: Yeah, well, I mean, I think first it's it's it's being really crisp and clear on your on your
[15:06] SPEAKER_01: core offering. And how do you get sharp at that? Like speed your client, see what's see what the problem
[15:12] SPEAKER_01: or opportunity is at your solving for them where they understand value and that's something that a small
[15:18] SPEAKER_01: business entrepreneur can do easily because they're so close to their customers each and every day.
[15:23] SPEAKER_01: So take advantage of that and understand, you know, what's working and what's not. So be
[15:27] SPEAKER_01: crispy and clear on that. I'd also say a plan, you know, plan for the unexpected. If anything,
[15:35] SPEAKER_01: learn over the past couple of years, having some plans and a bit of contingency plans is a good
[15:41] SPEAKER_01: thing to do. And and look at how do you digitize your business because it used to be that
[15:47] SPEAKER_01: digitization was something that was only accessible to, you know, the largest companies with
[15:53] SPEAKER_01: the big budgets. But in fact, there's so many tools and resources now that are available at a very
[15:59] SPEAKER_01: affordable price to small businesses to help them run and get all the benefits of, you know, technology
[16:05] SPEAKER_01: and their companies at a very small level that that it used to be big companies would have.
[16:11] SPEAKER_01: And and take advantage of all that tremendous of goodwill that you have locally. In fact,
[16:18] SPEAKER_01: 34% I believe are almost 40% of the people we survey. The entrepreneurs have said that strong
[16:25] SPEAKER_01: local support has encouraged them to get into starting a business and everything. So, you know,
[16:30] SPEAKER_00: tap that local goodwill that you have. When you talk to entrepreneurs these days and even
[16:38] SPEAKER_00: in the past, what's the big driver for them to doing what they do?
[16:46] SPEAKER_01: Well, I think many things, you know, I think that I full disclosure, I'm married to a business owner,
[16:52] SPEAKER_01: my wife owns a number of bakery stores here in Toronto. You know, I think it's the ability to
[17:02] SPEAKER_01: really own something and make a difference in the lives of people, their community, their employees,
[17:12] SPEAKER_01: their customers. And I think that's what really drives a lot of entrepreneurs is that that
[17:17] SPEAKER_01: desire to make a difference and to really, you know, have that be theirs and have that control
[17:25] SPEAKER_01: and ability to to, you know, to own the dream and make it happen. That can also be quite daunting,
[17:32] SPEAKER_01: but I think it's what drives them. And I know speaking to an awful lot of business owners,
[17:38] SPEAKER_01: they kind of say, you know, I could never go work in a large company or I could never go back to
[17:42] SPEAKER_01: when I worked there before because that freedom and independence and, you know, that control over,
[17:51] SPEAKER_01: over, you can every day other lives is a tremendous, tremendous motivator and seeing that difference
[17:56] SPEAKER_01: in their communities, you know, it goes, you know, I think it goes to a lot to their motivation.
[18:03] SPEAKER_00: Okay, not to put you on the spot, Don, but I'm just curious if you have any numbers off the
[18:08] SPEAKER_00: top of your head about the impact this small business has on the overall Canadian economy.
[18:15] SPEAKER_01: Oh gosh, I don't have the detailed numbers, but you know, a few to think about. I do know that
[18:20] SPEAKER_01: some of the largest increases in jobs and that new jobs created come from small businesses across
[18:28] SPEAKER_01: the country. And of course, there's millions of businesses and small businesses across the country.
[18:33] SPEAKER_01: And collectively, they're a huge driver of the Canadian economy. That's not to say that large
[18:39] SPEAKER_01: corporations and its ice companies aren't either, but those small businesses each
[18:43] SPEAKER_01: can every day are huge creators of wealth and jobs and innovation across Canada. So, you know,
[18:50] SPEAKER_01: I think we as Canadians should really want our small businesses to be strong. And I think we
[18:57] SPEAKER_01: should be very proud of the fact that we have a very entrepreneurial economy in that
[19:03] SPEAKER_00: entrepreneurialism as alive and well. All right. So, how can our listeners or viewers reach out
[19:12] SPEAKER_00: to you and RBC? They want more information or more help in any way? Sure, yeah. Well, I think I'd
[19:19] SPEAKER_01: start with RBC.com and the RBC small business navigator. And if you want to reach out and talk
[19:25] SPEAKER_01: to someone, there's definitely numbers there where you can reach some of our online advisors or
[19:32] SPEAKER_01: virtual advisors or just come in and see us at a local branch as well. We're always happy to
[19:38] SPEAKER_01: talk with anyone and see how we can help you with your dreams. All right. In closing, Don, any
[19:44] SPEAKER_00: final words of wisdom for entrepreneurs in this country, whether they be
[19:51] SPEAKER_00: established entrepreneurs or people who have got an idea and are just thinking about it.
[19:57] SPEAKER_01: I think I would just say talk to someone. You know, share those dreams and ideas.
[20:06] SPEAKER_01: And that will help you, you know, evolve your thinking and will give you the courage and
[20:11] SPEAKER_01: enthusiasm and support and confidence to dive in and make those dreams and the reality.
[20:17] SPEAKER_00: All right. Thanks for joining us today, Don. Thank you, Mario. Great to be here.
[20:22] SPEAKER_00: All right. That was Don Ludlow, who is vice president of small business, business,
[20:26] SPEAKER_00: financial services strategy and partnerships with RBC. I'm Mario Tonogusi with Canada's podcast.
[20:33] SPEAKER_00: Thanks for joining us today.