31 Canada Small Business Statistics For 2025: Key Insights, Challenges & Trends
Small businesses are deeply embedded in the fabric of Canada’s economy.
With more than a million operating across the country, they touch nearly every industry and community. The numbers below reveal just how widespread their influence is, from employment to entrepreneurship.
Small Businesses by the Numbers
These figures show just how dominant small businesses are in Canada’s business landscape. They’re not just a segment of the economy, they are the economy, accounting for the vast majority of businesses and employing millions nationwide.
- Small businesses (fewer than 100 employees) make up 98% of all employer businesses in Canada.
- There are approximately 1.29 million small businesses nationwide.
- These businesses employ over 10 million Canadians.
- 70% of small businesses have fewer than five employees.
- Small and medium-sized enterprises (SMEs, fewer than 500 employees) account for over 99% of all Canadian businesses.
Despite their size, many of these businesses run lean, often with just a handful of employees. Their presence across urban and rural areas makes them a key driver of local economic activity and community employment.
Economic Impact
The economic contributions of SMEs are significant.
They power nearly half of Canada’s GDP and employ a majority of the private-sector workforce. Their local multiplier effect also keeps dollars circulating close to home.
- SMEs contribute about 48% of Canada’s gross domestic product (GDP).
- Small businesses alone generate more than 35% of private-sector GDP.
- SMEs provide nearly 64% of private-sector jobs in the country.
- 84% of purchase dollars spent at small retailers stay within the local provincial economy.
- In the goods-producing sector, SMEs contribute over 50% of GDP.
- In the services sector, they account for roughly 47% of GDP.
These statistics underscore the significant role small businesses play in Canada, not only providing jobs but also contributing to the country’s broad-based economic health.
Local spending habits and SME-driven sectors amplify their reach.
Survival and Growth
Starting a business is one thing, keeping it going is another.
These figures point to the high risks in the early years, along with the persistent challenges that limit long-term growth.
- 21.5% of small businesses close within their first year.
- Roughly half of all small businesses survive beyond five years.
- Over 70% of failed small businesses cite management issues as the primary reason.
- Nearly half of small businesses in 2025 report growth as their main focus.
- Only 16.2% expect their sales to increase in the next quarter.
While many businesses are optimistic about growth, most expect it to be modest. The survival stats suggest that better training and planning, especially in management, could lead to more sustainable outcomes.
Provincial Distribution
The regional spread of small businesses shows which provinces are most business-dense, and which may have structural or population-related barriers to entrepreneurship.
- Ontario, Quebec, and British Columbia lead in total small business counts.
- Prince Edward Island has the highest concentration, with 48.7 small businesses per 1,000 residents.
- Quebec has the lowest concentration at 36.8 per 1,000 people.
Smaller provinces like PEI lead in per-capita business activity, showing strong entrepreneurial culture even in smaller populations. Larger provinces dominate in volume, but not necessarily in density.
Challenges Facing Small Businesses
While small businesses are resilient, they face a tough operating environment in 2025. Inflation, operating costs, talent shortages, and cash flow pressures are front of mind for many owners.
- 49.3% expect inflation to be a major hurdle in the next three months.
- 26% cite high operational costs as their biggest barrier to growth.
- 15.5% report workforce skill shortages as a limiting factor.
- Over 20% are concerned about cash flow issues.
These challenges aren’t new, but they’re becoming more intense. Inflation is cutting into margins, and many businesses are struggling to find and retain qualified staff, all while trying to stay competitive.
Business Sentiment and Confidence
Confidence levels among small business owners offer a snapshot of how they feel about the future. In 2025, many are still hopeful, but caution is setting in.
- 70% of small businesses remain optimistic about the year ahead.
- As of June 2025, the CFIB Business Barometer shows confidence at 47.3%, below the neutral benchmark of 50.
The optimism figure sounds encouraging, but when compared to confidence indices, it becomes clear that owners are hedging their bets. Uncertainty around costs, staffing, and demand is weighing on their outlook.
Demographics & Owner Perspectives
Behind every small business is a person, or a family, juggling more than just numbers. These insights into owner well-being and mindset add dimension to the data.
- 39% of owners say financial stress is their top mental health challenge.
- 58% believe work-life balance is critical to their business’s longevity.
- 97% contribute to their local communities in some form.
These numbers speak to the personal weight that small business owners carry. They’re not just employers, they’re also community builders, often working under financial and emotional strain.
Effects of External Factors
The aftershocks of the pandemic and ongoing competitive pressures are still being felt. For many small businesses, 2025 is about recovery and recalibration.
- 53% of businesses with fewer than 20 employees report post-pandemic revenue declines.
- 80% cite competition from large retailers and online platforms as a threat.
- Nearly one in five small businesses expect sales to decrease in the near future.
Competition from major players is making it harder for small businesses to gain traction, especially those still recovering from revenue drops. Many are bracing for stagnant or falling sales.
SMBs Anchor The Canadian Economy
Small businesses continue to anchor the Canadian economy, but 2025 is testing their resilience. The data reveals a sector facing both opportunities and pressure, eager to grow, but grappling with rising costs, staffing gaps, and growing competition.
Continued support from government programs, financial institutions, and communities will be vital to help them stay strong and succeed long-term.