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Archived — Occasional Paper Number 20: Aboriginal Businesses: Characteristics and Strategies for Growth

by David Caldwell and Pamela Hunt, Management Consulting Centre, Industry Canada under Contract with Aboriginal Business Canada, 1998


Summary

This report seeks to deepen understanding of privately owned Aboriginal businesses and their prospects for success or failure. It explores goals and strategies of Aboriginal businesses, and factors contributing to growth, such as skills, markets, technology, financing and use of government support. The report is based mainly on the results of the two-phase Aboriginal Business Survey (ABS) of Aboriginal-owned businesses in Canada. The first stage of the survey (Tier One) was carried out by Statistics Canada in late 1996, and the second phase (Tier Two) was completed in the spring of 1997. Other information, especially on the general business population, is used for purposes of comparison and to provide context.

The post-census 1991 Aboriginal Peoples Survey (APS) was the starting point for designing the ABS: it provided the frame for the survey. The aim of the ABS was to probe characteristics, behaviours and attitudes. The survey was not designed to gauge the size of the Aboriginal business economy in terms of employment, gross domestic product (GDP) or similar measures.

Consequently, the fact that some parts of the Aboriginal business community were not part of the survey frame, and are not represented in the results reported below, is not considered to be a crucial limiting factor. Additional information on the survey design and its limitations are provided in Appendix 1. Included in the discussion is an assessment of the impact of different assumptions with respect to the weight that younger businesses carried in the survey results.

In addition to growth factors, many other aspects of the private Aboriginal business sector are touched on in this report. These include Aboriginal heritage, ownership structure of the businesses, age and gender of business owners/proprietors, and location of facilities. Nevertheless, much work remains to be done. In particular, it would be interesting to design a survey intended to improve understanding of the ways in which on-reserve businesses differ from off-reserve businesses. The ABS was not designed to explore this question in depth, although the paper notes where statistically significant differences in responses between on-reserve and off-reserve businesses occurred.

In addition, it would be of considerable interest to explore how responses to the ABS differed across detailed industry groups. Unfortunately, the current data set does not support analysis of this nature. At the time of the survey, it was not known with any precision how Aboriginal businesses were distributed across industry sectors, and so the necessary stratification of the sample could not occur. Nevertheless, some industrial disaggregation was undertaken and the results are reported.

The report begins with a section that provides a sketch of the entrepreneurial Aboriginal business sector. The following section, "Goals and Strategies," contains information concerning the goals of Aboriginal business owners and their approach to increasing business income. The section entitled "Growth Factors for Aboriginal Businesses" examines factors that are related to the capacity of Aboriginal businesses to grow. "Aboriginal Businesses from a Broader Perspective" discusses the degree to which Aboriginal businesses are different from Canadian small businesses in general. "Aboriginal Businesses by Knowledge Category" explores how responses differ across knowledge groups. "Aboriginal Businesses by Degree of Success" reports on the differences between more and less successful Aboriginal businesses. The paper also includes a conclusion section. In addition, there are four appendices. The first discusses the survey methodology; the second presents a detailed profile of Aboriginal businesses; the third examines Aboriginal businesses that have ceased operations; and the fourth includes the questionnaires used in the surveys conducted among Aboriginal businesses.

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