Business,  Solving Small Business

Canadian small business by the numbers

Innovation, Science and Economic Development Canada publishes key small business statistics annually. This information provides a useful insight into the Canadian economy for small business owners and entrepreneurs and those who provide services to them.

Click here for full Small Business in Canada infographic

This article discusses some of the key findings which we consider will be of interest to readers. It should be noted that government’s definition of small business (a business with 1 to 99 employees) may be significantly different to that of the average business owner. According to the Canada Revenue Agency, a small business is defined as having fewer than 100 paid employees, with medium-sized businesses having 100-499 employees. Larger businesses are defined as having 500 or more workers.

At the end of 2015 there were 1.17 million businesses employing people in Canada of which 1.14 million were small businesses. That’s a staggering 97.9% – without question small businesses are the backbone of the Canadian economy. In terms of employment, small businesses employ 8.2 million individuals which is 70.5% of the total private labour force. Of these businesses 78.5% were in the service-producing sector and 21.5% in the goods-producing sector.

Of course, to many of us a firm with even 50 employees is large, so what about micro-enterprises? Those who only employee one to four people? Impressively, these account for 53.8% of all private employers – the largest small to medium enterprise (SME) group.

Now, it gets really interesting. When we extend the range to include five to nineteen employees, those businesses account for 86.4% of all employer businesses.

Geographically, more than half of all small employer businesses are in Ontario and Quebec (642,250). British Columbia leads Western Canada with 179,517 small businesses (December 2017) and Nova Scotia leads the Atlantic provinces with 28,874. However, relative to population (i.e. number of businesses per 1,000 of population) Alberta and PEI have the greatest number.

In terms of employment growth, the report states, “Over the last five years, private sector employment has increased in all provinces, with the exception of Newfoundland and Labrador and Nova Scotia. The highest contribution to net employment change among SMEs was observed in Saskatchewan, where 98.0% of net employment change was attributable to SMEs, followed by British Columbia at 91.4%. In Ontario, where net employment change was highest (317,600), 84.3% of this change was attributable to SMEs.”

What is most interesting and worth noting is that from 2013−2017, all net employment change was attributable to businesses in the service-producing sector; employment in the goods-producing sector did not increase.

The report goes on to find that, in terms of survival, businesses in the goods-producing and service-producing sectors showed similar survival rates over the course of the first two years after their creation. However, after the third-year survival rates in the goods-producing sector were better. At the five years mark 66.8% of businesses in the goods-producing sector were still operating, compared with 63.3% of businesses in the service-producing sector. At 10 years the rates were 47.8% and 42.9%.

Of particular interest is the fact that businesses which started with a large number of employees had a higher survival rate than businesses that began with a smaller number of employees. Go to the report for a full breakdown.

Over three-quarters of start-ups (2-years or younger) used personal financing to get their business up and running. This was usually due to a lack of credit history or collateral. The bank of mom and dad still reigns supreme.

Nationally, businesses with less than 100 employees contributed almost 40% to Canada’s gross domestic product.

Here are a few final interesting facts about small business in Canada. Over half of all companies in Canada are located in Ontario and Quebec and over one-third in the western provinces.

In terms of self-employed people, approximately one-third are women and a little over 14% of all small businesses in Canada are wholly owned by women.

As a small business or micro-enterprise owner, make no mistake you play a vital part in the Canadian economy.

To read the full ISEDC report visit: https://www.ic.gc.ca/eic/site…

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