The financial literacy of Canadian entrepreneurs

In Canada, borrowing money to gain leverage and achieve stronger growth is one of the tools that business owners need to learn about.

In other parts of the world, however, debt can be viewed less favourably. Consequently, some immigrant business owners may be less likely to take risks, at least during their first few years in the country.

This could also be because the rules governing tax, finance, and business management may differ from one country to another.

3. Differences in business size

Attitudes towards risk-taking follow a similar trend when comparing small businesses to larger ones.

The smaller the company, the closer the behaviour of business owners is to that of the general public. Their risk tolerance is lower and the way they manage their finances is closer to what the general population does.

A question of confidence

A good way to address these differences is by building up the confidence of  entrepreneurs.

Lower self-confidence can lead to doubts about our ability to make the right decisions. It impacts the willingness to push harder and to take a bit more risk, which can be an obstacle to business growth.

encouraging business owners to take a bit more risk could help turn the tide. One way to do this would be to provide more women role models in various fields, including the financial sector. To this day, the financial sector remains a male-dominated environment, whether you look at big investment firms or financial institutions.

There is this perception that women entrepreneurs have less access to financing. However, our data show that women tend to wait until a project is quite advanced in the planning stage before applying for financing, owing to their lack of confidence. The upside to this, however, is that their acceptance rates are higher.

Being in business doesn’t necessarily equate being financially literate

We often assume that business owners have solid financial knowledge. However, they don’t necessarily know more about finance than anyone else working in any other field.

That false impression can create pressure on business owners. Some are embarrassed about not knowing how to properly manage their finances. They can be tempted to try to avoid dealing with finances or even just delegate that function altogether. One solution to that is to offer self-paced online tools that make it easy to build financial literacy without embarrassment.

Many entrepreneurs who start their own business are passionate specialists in a particular field that often has very little—if anything—to do with finance. In the past, we have asked business owners what area they felt they most needed help with. More often than not, it was in accounting or finance, which says a lot!

In fact, finance has often been reported as being one of the least enjoyable aspects of managing a business. The increase in the percentage of entrepreneurs who say they actually enjoy dealing with financial matters is good news.

Next steps

How does your financial literacy compare to that of other business owners? To find out, complete our quiz to answer the same 10 questions we asked business owners in our report.