Consumer behaviours have changed and with it the landscape for small businesses across Canada. It’s important to step back and have a look at what’s happening in the industry.
A new report from the Canadian Chamber of Commerce’s Business Data Lab titled A Portrait of Small Business in Canada: Adaption, Agility, All At Once does just that.
Small business is the backbone of the economy, making up 98% of businesses in Canada, employing 11 million people. Small businesses are considered businesses with 1 to 99 employees. Within that designation, micro businesses (1 to 4 employees) are by far the most common with the median small business having fewer than five employees.
The report states: “This underscores the importance of improving our understanding of the business realities of all small firms, but especially micro firms, while ensuring that adequate financial, operational and regulatory support measures boost the resilience of small and micro businesses for the sake of Canada’s economy. Put simply, the survival of micro firms is a macroeconomic issue for Canada.”
The report also looks into the realities, challenges, and opportunities for small businesses owned by women, persons with disabilities, members of the LGBTQ2s+ community, immigrants to Canada, Indigenous peoples, and visible minorities.
For example, immigrants make up 25.5% of all private sector businesses, well above their 23% representation in Canada’s population. However, within this, immigrants are less likely to own larger businesses.
Progress was made in recent years with women having more opportunity through flexible work arrangements, leading to more women in in-demand work at higher pay. While government programming aims to increase access to childcare, the transition back to the physical workspace is threatening to scale back progress for women.
Majority ownership of private sector small businesses in Canada, by underrepresented/equity-seeking groups.
• Immigrant to Canada – 25.5% of businesses/23% of population
• Visible Minority – 19.2% of businesses/26.5% of population
• Women – 17.8% of businesses/50.9% of population
• LGBTQ2s+ – 3.3% of businesses/4% of population
• Persons with a disability – 2.2 of businesses/22% of population
• Indigenous – 2.2% of businesses/5% of population
When looking at the situation for small businesses, Business Data Lab notes many of the problems they faced prior to the pandemic persisted or were exacerbated during it. They found the smaller the firm, the bigger the problems. Smaller businesses faced more significant revenue declines, worse debt constraints, and have more difficulties adopting new technologies.
Workforce challenges also hit small businesses the hardest. While large businesses increased their employment numbers by 26% and medium businesses by 13% from January 2020 to July 2023, small businesses had no growth registering a 0% increase in employment.
The report itself has a lot more insight and information and is worth a read.
While vulnerable, our small and micro businesses remain nimble. Investing in digital will help, but it’s not a one-size-fits-all solution.
The report notes: “With one era of global upheaval in our rearview and another with as many uncertainties ahead, a bright light from the data is the nimbleness of small businesses. However, even with their impressive resilience, agility and adaptability in leveraging the appropriate technologies to stay connected with customers and to streamline their operations, the reality is that small businesses remain strapped for funding, resources and exposure.”
It’s imperative that we invest in our local small businesses — it goes a long way to building a stronger, more resilient local economy.
The Peterborough and the Kawarthas Chamber of Commerce acts as a catalyst to enhance business growth, opportunity, innovation, partnerships and a diverse business community.