Their legions are growing and experts say they're desperately needed, but Canada's business environment may not be the best environment for cultivating young entrepreneurs.

The Business Development Corp. (BDC), the federal agency charged with assisting small and medium-sized businesses to start up and grow, says it has made youth a priority to help populate the country with more entrepreneurs.

"If you look at the typical age of entrepreneurs running small to mid-sized businesses, around 50 per cent are looking at retirement in 10 years or less, 35 per cent in five years or less - and that's huge," says Wellington Holbrook, vice-president of operations for Western Canada.

The BDC offers both financial support and consulting services to help budding business people avoid the common pitfalls of entrepreneurship. Holbrook says he views many of the young entrepreneurs he deals with as being savvy, creative and innovative - important qualities that should not be squandered.

J.J. Ali, Business Edge
Rebecca McCormack started Cake Clothing with help from the Women's Enterprise Centre.

"When you look at the world and the growth in countries like India and China, we need more of that creative thinking if we're going to remain competitive as a country, and I think it's something youth can bring to the table."

In Canada, access to capital is always an issue for any emerging business, but in particular for ones being run by younger folks, says Leo Donlevy, senior instructor in the entrepreneurship and innovation department at the University of Calgary's Haskayne School of Business.

"As much as the banks talk about being friendly to small business and so on, I really don't see any evidence to support that," Donlevy says. "They've all gone to formula lending for the smaller dollar amounts - they really don't care about what business you're in, they care about if you're able to pay them back."

Most young entrepreneurs must rely on family for seed money, or angel investors - individual investors, sometimes entrepreneurs themselves, who look for innovative ideas they believe can give them a better bang for their buck than traditional investments - he says.

Finding someone who shared her dream was one of the biggest challenges faced by Rebecca McCormack, owner of Cake Clothing in downtown Winnipeg.

"It was hard starting. It was just very hard dealing with financial people, and retail is very risky and no one was very willing to give me money," says McCormack, who was 30 when she made the plunge into business in 2003.

"They said, 'You don't have enough money, this is too risky.' The banks will only give a certain amount, they'll double what you have, but I only had 10 per cent of what the startup costs were."

Finally the Women's Enterprise Centre - a service provided by Western Economic Diversification Canada - and the not-for-profit Canada Youth Business Foundation (CYBF) agreed to pony up some cash. After scraping together $4,000 from her family and her own bank account and securing the loans, McCormack was able to raise the cash she needed.

Since opening Cake Clothing - which provides stylish, contemporary women's clothing for the 18-35 set, a niche she says was lacking in Winnipeg - McCormack won awards from both the CYBF and the enterprise centre.

Those awards, and her store's success, were hard fought.

"You don't do this unless you can do it full time at the beginning. I've been at this for two and a half years and for the first two years this is all I did," she says. "It's definitely worth it, but only if you have 100 per cent to give."

Not all young entrepreneurs are in the same boat.

Matthew Gitter could be one of the most envied young entrepreneurs in Canada. In the spring of 2004 at age 17 and having just finished his penultimate year of high school, the Thornhill, Ont. youth launched Computer Medic as an alternative to a summer job. Since then, his little business has grown rapidly.

"It was frustrating trying to find a job, and also the fact I could work for myself and make my own hours so I wouldn't have to be under somebody's thumb 24/7," says Gitter of his motivation to venture out on his own at such a young age.

"Things are going well - a lot of growth in my customer base."

Computer Medic provides services that include system diagnostic tests, network support, virus and spyware removal, and also sells computers and offers repair services for these items.

Gitter received a $3,000 grant under the Ontario government's Young Entrepreneurs Summer Company Program. He also had to attend business-training sessions and was put under the supervision of a mentor from the business community.

His biggest advantage is that he works from his parents' home, so other than his monthly outlay for his website, he accrues few other expenses, allowing him to reinvest in his micro-enterprise. He travels by public transit to visit clients.

"I really didn't need much in the way of hardware or supplies, so most of the grant money went toward advertising," he says, adding that he's cut back on marketing his venture because he's trying to balance his work life with his school life after recently enrolling in George Brown College in Toronto to study computers.

According to data gathered by the Canadian Federation of Independent Business (CFIB), only about seven per cent of all owners of small and medium-sized businesses are younger than 30 years old; the age group represents about one-quarter of Canada's population.

Ted Mallett, vice-president of research with the CFIB, says this figure tells him that young people typically want to gain experience after graduation, which is probably a good idea given the challenges of launching a new business.

He says factors such as building up contacts or understanding the business they're getting into are vital for success, and often the best way to gain this experience is to work for someone else in a particular industry.

While the CFIB doesn't track trends by age, Mallett says typically about 50 per cent of businesses disappear within five years of their creation - about 10 per cent of these are a result of bankruptcy, with the remainder through buyouts, ownership change or simply winding down to pursue other opportunities.

"There are lots of self-employed young people right out of school, and that's great; there are many segments of the business world where that makes a lot of sense for people," Mallett says. "But the numbers seem to indicate that they will generally have higher success if they've built up experience as well."

Ilan Vertinsky, director of the W. Maurice Young Entrepreneurship and Venture Capital Research Centre at the University of British Columbia's Sauder School of Business, also believes that experience is an invaluable weapon in an entrepreneur's arsenal, and especially potent when trying to convince skeptical investors to open their wallets.

Nevertheless, he says, in general, Canadian cultural norms can hinder up-and-coming business people who have a good idea, some experience and a lot of enthusiasm.

"Compared to the U.S., there is less cultural encouragement (to become entrepreneurs) here. As a Canadian, if my children wanted to open a business, I'd tell them to go and get education first and get a good job and then think about it," he says.

Vertinsky adds that the U.S. has a more aggressive attitude and is more tolerant of failure in business.

"In Canada, even veteran entrepreneurs wouldn't come and say 'I've failed now three times,' while in the U.S. some people might admire it because it shows they are willing to take risks and are undeterred."

(John Ludwick can be reached at ludwick@businessedge.ca)