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Activity among Canada's small businesses outpaced the overall economy last year, with a surge of older entrepreneurs — or 'seniorpreneurs' — choosing to work for themselves in order to maintain a balanced lifestyle.

According to a report from CIBC World Markets Inc. economist Benjamin Tal, Canada's small business owners are increasingly likely to have grey hair. In 2005, Canadians over the age of 55 comprised a record high 25 per cent of the self-employed in Canada, up from 35 per cent in 2001.

"Seniorpreneurs currently constitute more than 30 per cent of the total work force over the age of 55," Mr. Tal said in the report, adding that the age group is by far the fastest-growing segment in the small business sector.

"Long-term demographic trends suggest that older entrepreneurs will play an even more important role in the economic landscape, as the population ages and the traditional work force age cohort declines," he said. "Unfortunately, the role of older business operators has been largely ignored in contemporary small business research."

One of the most notable changes in the nature of the small business sector is that many seniorpreneur-based businesses start small and often, they want to remain small, Mr. Tal said. That notion flies in the face of conventional wisdom that suggests all business want to grow into multi-national operations, and the current blanket policy geared towards expansion should be reconsidered in light of the fact that most small companies want to stay small.

The CIBC report showed that almost 60 per cent of all small business owners in Canada see themselves as “lifestylers” that use their business as a means of earning an income, while balancing other commitments or lifestyle choices.

According to Mr. Tal, the desire to balance working with living explains, in part, why Canadian small businesses do not grow in size as fast as their American counterparts.

In 2005, small business activity grew by 3.7 per cent on an annualized basis, outpacing the national economy as a whole.

The out-performance suggests that small businesses are not nearly as susceptible as larger companies to the steep rise of the loonie. "Small businesses tend to be less exposed to foreign markets than large firms and are flexible enough to cut expenses and quickly divert production to offset currency-related costs," Mr. Tal said.

The CIBC report said that a quarter of small companies are in sectors that would be directly hurt by a stronger loonie.

Vancouver experienced the fastest pace of small business growth between 2003 and 2005, followed by St. John's, Victoria and Calgary. Almost all of the expansion took place in large urban centres, while the number of small business in rural areas declined.

Since the start of the year, there has been a 3 per cent fall in the number of self-employed Canadians. "Ironically, this should be seen as a positive development since a larger proportion of the self-employed are now in business by choice rather than necessity," Mr. Tal said.

The drop also suggests the pool of self-employed are of a higher 'quality,' he added.

There has also been a recent softening in small business borrowing, largely because of lower demand, the CIBC report said. The main factors behind this reduced demand are: the nature of the recent cycle; increased alternative sources of funding for small business; and increased business usage of personal credit.

The number of businesses filing for bankruptcy protection fell 10.5 per cent during the year ending June 2006, Mr. Tal said. "Looking ahead, we expect more of the same." He forecast a 13 per cent drop in 2006.