Calgary sees record number of business starts amid economic downturn
Entrepreneurs using money from severance packages to launch new ventures
Originally published on Oct. 26.
When Kelly Bruce was laid off from her job, it ended a 17-year career working in the oilpatch corporate office towers in downtown Calgary. The news came on a Wednesday in January, and at first she was in shock. The next day she was angry. By Friday, she was over it and knew exactly what she was going to do next.
Using her severance pay, Bruce turned her online stationery store from a hobby into a new career.
The website Little Blue Canoe has expanded well beyond stationery to now offer 500 products from more than 75 vendors across Canada and is approaching its 1,000th sale.
The downturn in the oilpatch has claimed tens of thousands of workers. Thousands of businesses are closing, even an iconic century-old Western wear shop.
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Flurry of activity
But while Calgary is experiencing a record level of business closures, at the same time there is also a record number of new businesses opening, according to the city's chamber of commerce. The latest city licence numbers suggest business closures are on pace to exceed 7,000 this year, an increase over 2014 and 2015. The number of new business licences taken out is also on pace to surpass 7,000 in 2016, which is higher than past years.
Most people close to me thought I was crazy to be buying into a business in Alberta.- Laurie Gauthier, Silkstone & Granite
The figures, however, do not show the size of the firms, so it's unclear whether the number of new employees being hired is keeping pace with the number of employees who were laid off.
Despite the downturn, the entrepreneurial enthusiasm remains strong in people like Laurie Gauthier.
"Most people close to me thought I was crazy to be buying into a business in Alberta at this stage of the game," said Gauthier, who took over countertop maker Silkstone and Granite in April.
Gauthier had retired after selling a pharmaceutical distribution company. His investments were weighted heavily in Alberta's oilpatch. The returns were great, he said, until his portfolio crashed a few years ago as commodity prices plunged.
He specifically wanted to buy an existing business rather than start from scratch.
"It's not like I was starting anew, which I would not have done. It's just too risky and an amazing amount of work," said Gauthier.
Contributing factors
There's no single reason for why so many new businesses are emerging in the city. Calgary likes to tout its entrepreneurial spirit, which may be strong even in a recession. It may also be born out of desperation.
A combination of severance packages and a tough job market have people looking to take employment into their own hands. People are also saying goodbye to the of the oil and gas industry's ups and downs.
"We're seeing a period of change in our economy," said Scott Crockatt with the Calgary Chamber of Commerce. "Things that were profitable in the past are becoming less profitable now, and new emerging industries are coming up — and one of the real trends we are seeing in Calgary is tech businesses starting up."
One advantage of starting a new business in a slow economy is the lower cost of leasing real estate and the increased labour pool. Finding enough qualified workers was a problem for many businesses during the boom years and it often showed in the quality of service.
The slowdown in the oilpatch is not preventing new businesses even in that sector.
Mike Smith left his job at an oil and gas investment firm to join a new company, Strait Financial, which focuses on pipeline and facility construction and financing.
Despite continued slumping commodity prices, he had little apprehension about being part of a new company, where he will have an ownership stake. He called it an educated risk.
I have to keep my feet moving.- Mike Smith, about joining a new company in a downturn
"An opportunity came up that rhymed with what I was doing in the past," he said.
Being an entrepreneur isn't for everyone, as new businesses often require long hours and wearing many hats. While the risk of failure can be high, owning a business does offer perks over a 9-to-5 job.
Bruce, the owner of Little Blue Canoe, says she is now less stressed, although the transition wasn't worry-free.
"It's always a little nerve-wracking when you think, 'Oh my goodness, what if this doesn't work?'" she said. "Hopefully it works. If not, I've tried, I've learned and we'll see what happens."
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