TD’s Julia Kelly talks to WP about the bank’s research for Small Business Month
October is Small Business Month and for many advisors the concerns and dreams of their business owner clients have been tested in recent years. But do young Canadians still have entrepreneurial aspirations?
It certainly appears that way, according to a new TD survey released today (10/1) which reveals that 73% of Gen Z Canadians want to start their own business, but many also face barriers ranging from financial constraints to lack of experience. The findings provide useful insights for advisors in supporting the business plans of their clients or the next generation.
Wealth Professional has been finding out more from Julia Kelly, vice president of Small Business Banking at TD, who says that this generation’s approach to entrepreneurship reflects both the opportunities and challenges of a digital era.
“When I think back to my 20s, I wasn’t thinking about entrepreneurship or talking about it with my friends,” she recalls. “Today, there is a huge ecosystem of information and online tools to get started and scale a business. For Gen Z entrepreneurs, it’s easier to learn how to take action on an idea and turn it into a business.”
The survey highlights how financial independence and freedom are the top motivators for Gen Z to become entrepreneurs but they need to be aware of the reality of entrepreneurship and the commitment it requires.
Perhaps unsurprisingly, e-commerce and content creation ranked highly as preferred ventures for Gen Z and Kelly sees this as a natural fit for young entrepreneurs eager to experiment with lower barriers to entry.
“E-commerce and digital business is such a great way for Gen Z entrepreneurs to ease into business ownership,” she says. “With e-commerce, you can learn more about an industry or being an entrepreneur by operating a business with minimal capital investment… you can focus on logistics, marketing and sales, while you build experience and confidence as a business owner.”
But while these young Canadians are digital natives, three in four Gen Zers worry about failure due to lack of experience in business, while 31% cite limited financial resources as their biggest deterrent.
“The fear of failure is always present. There’s a healthy tension between fear and risk taking in starting a business,” she says. “When you put your idea down on paper and start mapping out what the business is, who your customers are, and other factors, you can figure out what you already have and what you need to gain or learn before taking action.”
The survey found that 67% of Gen Z admit they lack the financial knowledge to run a business. For Kelly, two skills stand out, cash forecasting and debt management.
“As a business owner, your efforts and decisions are what drive how much you take home,” she says. “You need to know how much money is coming in and going out every month. When you’re on top of these details, you can make high-quality decisions to benefit the long-term growth of the business and feel confident about your day-to-day decisions.”
When it comes to funding, there are several options, but again it’s important to have done the work necessary to understand the costs and revenue potential of the business.
“The first step is to know your numbers: what startup costs do you need to get going and how long will it take to see a profit. Once you know this magic number, you can map out where it can come from: grants, business loans, line of credit,” Kelly says.
And while the dreams of young Canadian entrepreneurs may be big, Kelly encourages Gen Z to consider starting small.
“Starting a business as a side hustle is such a great way for Gen Z to get started. Think strategically about finding a full-time or even part-time job in the industry. Use this income to cover your bills while building the business on the side,” she says.
Kelly sees Gen Z’s entrepreneurial drive as a positive force for the future of Canadian small business.
“The fact that so many Gen Z see business ownership as an attractive option is encouraging for the future,” she says. “They’re in a position to enter entrepreneurship during a period of transition. This is where inexperience might be an advantage, because they’re not weighed down by the way things have always been.”
And her advice on the first step to take for anyone considering their first venture?
“Talk to someone about your business idea, especially someone who knows about building a business,” she says. “Even better if they’ve built the type of business you want to build. If your idea stays in your mind, it can only ever be an idea. Once you tell someone about it, you’re one step closer to making it a reality.”
