Small businesses are the heartbeat of Canada’s economy, driving innovation, employment, and community growth. As we move through 2025, understanding the latest trends and statistics can help entrepreneurs navigate challenges and seize opportunities.
Below, we’ve compiled the top 15 small business statistics in Canada, offering insights into their impact, challenges, and future outlook.
The Backbone of the Economy
1. Small Businesses Dominate
Small businesses, defined as those with fewer than 100 employees, account for 98.1% of all employer businesses in Canada. With approximately 1.29 million small businesses as of 2024, they form the foundation of the nation’s economic activity.
2. Major Employers
In 2023, small businesses employed 5.7 million Canadians, representing 46.8% of the private sector workforce. This highlights their critical role in job creation and sustaining livelihoods across the country.
3. Significant GDP Contribution
Small and medium-sized enterprises (SMEs) together contribute over 50% to Canada’s GDP. In 2023, small businesses alone were responsible for 35% of the private sector’s GDP, underscoring their economic weight.
Employment and Growth Trends
4. Job Creation Leaders
Between 2014 and 2019, small businesses drove 35.8% of net employment growth in the private sector, adding significant numbers to the workforce despite economic fluctuations.
5. Sector Diversity
The service sector dominates, with 71% of small businesses operating in areas like professional services, healthcare, and food services. Retail (15%), construction (8%), and manufacturing (6%) also host thriving small business communities.
6. Regional Powerhouses
Ontario leads with nearly 500,000 small businesses, followed by Quebec (250,000), British Columbia (200,000), and Alberta (150,000). These provinces are hubs of entrepreneurial activity.
Challenges Facing Small Businesses
7. Revenue Struggles
In 2023, 30.5% of small businesses with 1 to 19 employees reported lower revenues compared to 2022, reflecting ongoing recovery challenges post-pandemic.
8. Cash Flow Concerns
Over 20% of small businesses express worry about cash flow, with rising costs and interest rates adding pressure to their operations.
9. High Closure Rates
Approximately 5% of small businesses don’t survive their first year, and only 35% make it past five years. Management issues contribute to over 70% of these failures.
Read also: How to Close a Small Business in Canada: A Step-by-Step Guide
10. Debt Aversion
In early 2023, 28.1% of businesses with 1 to 19 employees said they couldn’t take on more debt, citing unfavorable interest rates as a major barrier.
Optimism and Adaptation
11. Mixed Outlook
While 82% of small businesses with 20-100 employees feel optimistic about the future, only 68.7% of those with fewer than 20 employees share that confidence. Smaller firms also expect profitability to dip, with 35.6% anticipating declines.
12. Digital Adoption
In 2024, 35% of small businesses still accept cash, but many are embracing digital payments. Credit card processing and e-commerce are growing, especially in retail and food services.
Read also: 11 Best Online Businesses to Start in Canada
13. Export Contributions
Small businesses play a role in global trade, with SMEs contributing 68.3% of the value of goods exported to the UK in 2023, though exports to the US slightly declined.
Emerging Trends
14. Startup Surge
Canada is home to about 50,000 startups in 2024, employing 250,000 people. These innovative ventures are pushing boundaries in technology and healthcare, with an average of 5-15 employees per startup.
15. Self-Employment Rise
The gig economy and entrepreneurship are fueling self-employment, with over 1.1 million workers in British Columbia alone employed by small businesses, many as sole proprietors.
How About the Future?
These statistics paint a picture of resilience and adaptation.
Small businesses in Canada face hurdles like rising costs and economic uncertainty, but they also show remarkable agility—whether through embracing digital tools, exploring new markets, or innovating within their sectors.
For entrepreneurs, staying informed and leveraging resources is key to thriving in this dynamic landscape.
One critical resource for any small business is a strong online presence.
Today, having a reliable website can make or break your success, whether you’re selling products, offering services, or building your brand.
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Read also:
- Top 10 Reasons Why Small Businesses Fail in Canada
- How to Start a Vending Machine Business in Canada
- #10 Best Profitable Small Business Ideas in Canada
