Albertans turn increasingly to self-employment in recession's wake

Rhonda Law sells small-batch, designer dog biscuits.

They come in a variety of styles and prices. The "Chicken & Wooffles" pack includes seven biscuits and sells for $12.50. For $16, you can get a dozen "Lucky Dog Fortune Cookies" complete with personalized, paper messages for your pooch.

She does this full time, now. But a year and a half ago, she was still working as a mental health outreach nurse.

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Herold job paid well and afforded her a large home in a sought-after, inner-city neighbourhood. But the work had become unfulfilling, and the dog-biscuit opportunity beckoned. So she quit the steady gig, sold the big house, and moved to a smaller condo. She devoted herself to what had previously been a side hustle.

She made the decision just as the unemployment rate had peaked in Calgary at north of 10 per cent. The two-year recession that had gripped Alberta was finally coming to an end, although it wouldn't have felt like it at the time to most people in the province. And yet, at that same moment, Law was far from alone as she considered making the leap into self-employment.

Tens of thousands of Albertanshave since joined her and taken the plunge. Whether out of a sense of opportunity or necessity (or a little bit of both), these people have chosen to stop seeking a steady paycheque and instead set out to be their own boss. Their swelling ranks account for 86 per cent of the net job growth in the province over the past year and a half.

And while it can be a freer, more fulfilling way to earn a living, it can also come with struggles and stress. Those in the field say hard work and a little luck can go a long way in forging your dream job. Butbe prepared. The hours are long, the pay is uncertain and the risk of ruin is real.

The cold, hard numbers

Entrepreneurs tend to be optimists. You're more likely to hear of their successes than their failures.But while anecdotes may beencouraging,the evidence is not always as rosy.

Consider a few figures, courtesy of Statistics Canada.

Seven out 10 self-employed Albertansdo it entirely on their own, with no paid help. They work 10 per cent more hours per week, on average, than people who are employed by others. And yet, there's no guarantee that money will follow.

The average income among self-employed people in this province is about 15 per cent lower than those on a corporate payroll. But the median income is a whopping 48 per cent lower, suggesting that for every success story, there are multiple people just barely scraping by.

But that seems to be no deterrent. All told, roughly 410,000 Albertans are now self-employed. That's an increase of 43,000 from a year and a half ago.The number of people working as employees, meanwhile, grew by just 7,000 over that same period.

Tap or run your mouse over this interactive graph to explore the numbers:

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The typeof work being done is varied.

The biggest sector is construction, accounting for about 78,000 of the self-employed Albertans, at last count.

Another 66,000 work in professional, scientific, and technical services. This includes accountants, lawyers, architects, engineers, and people who work in advertising and public relations.

The remaining 265,000 or so are spread across a wide range of industries, but some of the biggest are agriculture, health services, wholesale and retail trade, and a broad category that includesfinance, insurance, and real estate.

"The breadth of entrepreneurs that we're seeing is pretty diverse," said Curtis Stange, chief customer officer with ATB Financial, which offers a variety of loans and specialized supports focused on small businesses.

But while some entrepreneurs, like Law, deliberately opt to leave a job and become their own bosses, others have less choice in the matter.

By choice or by circumstance

Stangesaid there's "certainly" a segment of the newly self-employed who made the decision after an economic "trigger" such as a job loss.

For those people,entrepreneurship may not have been Plan A, but it beatsthe prospect of continued unemployment or a major career change.

"I know some people have experienced the downturn in the economy and they lost their job and there maybe wasn't any immediate opportunity to continue working in their field, so they look for new opportunities," saidPaula Worthington, a recent entrepreneur.

She said she feels lucky, herself,to have been able to make a conscious choice to go it alone.

This past February she launched her own communications firm, Worthington PR & Story, after 16 years of working in marketing and public relations.

"I was craving a little bit more of a flexible lifestyle," she said. "And it felt like I had the experience and knowledge behind me and the network to go out and start my own business."

Worthington has found a community of entrepreneurs in Calgary who share knowledge and ideas and act as a support group for each other. While all jobs comes with their ups and downs, she said those are often magnified when you're working for yourself.

"It can consume you," she said. "You can find yourself working really long hours or hitting obstacles that you didn't see coming. And you are a little bit at the mercy of the economy and not every day is going to be fantastic."

But there are upsides, too. You can set your own hours. You can engage your creativity. You can earn the sense of satisfaction that comes with building something from the ground up.

And that's what Worthington believes attracts most entrepreneurs to the lifestyle.While some might be forced into it by job loss or economic circumstance, her sense is that there are more people "consciously wanting to do it, and looking for a change."

Others, however, make the leap more quickly sometimes without looking as closely as they ought to.

The risks

Wayne Weber, a licensed insolvency trustee withGrant Thornton Debt Solutions in Calgary, often sees people run into financial problems when they rush into self-employment.

He said a lot of tradespeople, in particular, set up their own companies in order to dobusiness with larger oil and gas firms thatwon't deal withunincorporated individuals.

"They have to go out and incorporate their own company, and they really don't understand what that means," he said.

One of the biggest mistakes they often make, he said,is forgetting to calculate and set aside the money they'll owe in taxes by the end of the year.

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"That's typically what we see. They run afoul of Revenue Canada for income taxes, unremitted source deductions, unremitted GST," Weber said.

"Sometimes that goes on for a couple of years and it just gets worse and worse as it goes along until, eventually, they're $50,000 in the hole."

In extreme cases, he said Revenue Canada can seize a person's bank accounts, garnish their wagesor put a lien on their home to collect on the unpaid taxes.

Weber said his biggest recommendation is to get "a really good bookkeeper" and keep on top of the business'sfinances every month to avoid getting into trouble, as taxes are just one of many obstacles that can trip up an entrepreneur.

Of course with that risk, comes the opportunity for reward.

Which brings us back to Law, the nurse-turned-dog-biscuit-vendor.

The rewards

She didn't seek to become self-employed overnight. Over time, rather, the opportunity revealed itself.

"I was already baking dog treats for my dog that was quite picky," Law said. "Then I started baking them for co-workers and friends and that turned into a small, little side business. Eventually I started adding different products to the line and that's when I saw the business really take off."

Her company, Bark YYC, now sells more than just cookies for canines. It also offers a range of "chic and on trend accessories for your four-legged friends," from bandanas to leashes to poop-bag dispensers made out vegan leather.

"I was completely surprised by the response I got from Calgarians, alone, not even considering online sales from the U.S. and across Canada," she said.

"Once I was able to identify that this could be a sustainable business was when I decided to leave my full-time nursing job."

Law said getting a business of the ground is a lot of work. The payoff, however, can come not just in money but in lifestyle something she and her fiance had been craving.

They now live a "simpler and slower life" since she went fully self-employed.

"This move just gave me more time to work on my business, more time to be with our dogs, more time to be with each other," she said.

"So it felt like more of a complete change of pace in our lives."

Of course, results may vary when foregoing a steady paycheque for the independence of working for yourself.

Nevertheless, more and more Albertans are giving it a try.

Calgary: The Road Aheadis CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us atcalgarytheroadahead@cbc.ca.

More from the series:

• Most homes listed for sale in Calgary this year haven't sold: What that means for prices
• Why young people who can afford it are choosing not to buy homes in Calgary
• Why Alberta's economic 'recovery' feels so different this time