Good-bye to the mom-and-pop shop
10 per cent of Canadian businesses wiped out and family-run businesses are hardest hit, thanks mostly to onerous government policies
Farmers Forum staff
Small businesses in Canada are taking a beating. In fact, 10 % of small operators have closed down since the pandemic. But family-run businesses suffered the most.
Department of Industry data and Canadian Federation of Independent Business research show that nationally closures of small businesses now outnumber start-ups.
“We are bleeding businesses,” said Simon Gaudreault, chief economist with the federation of independent business. “Entrepreneurs by nature are optimists, but when we ask them if they would recommend that someone start a small business in Canada, the downward trend is very concerning.”
There were 1,079,118 small businesses in Canada last year. That’s a loss of 121,453 businesses or 10 per cent from pre-pandemic levels from 2019, according to Key Small Business Statistics in the federal department of industry.
Small businesses were defined as businesses with fewer than 100 employees. The majority, 58 %, had fewer than five employees. Small businesses are the largest job creators in the private sector and last year employed 6,824,200 people.
“This is something we have seen in different data points for quite some time,” said Gaudreault, noting that “entry and exit rates in Canada have been declining (for years).”
The number of business closures began rising from mid-2021 and that trend hasn’t stopped. There was “a surge in insolvencies that peaked in the first quarter of 2024,” according to a CFIB analysis called Business Entry And Exit Trends 2015-2025. “Net entries have since turned negative with the gap widening each quarter.”
What caused the destruction to small business? According to Gaudreault the problems were numerous including the pandemic lockdowns, supply chain disruptions, inflation and tariffs. In other words, it was almost entirely caused by government policy.
“People understandably pay a lot of attention to bankruptcy statistics,” he said. “That is what gets the headlines. But they are just the tip of the iceberg.”
Family-owned firms were hardest hit by pandemic lockdowns and other Covid-era troubles, according to 2022 research by the Department of Industry, reported Blacklock’s Reporter.
“There has been a substantial decline in the percentage of small and medium sized enterprises owned by members of the same family,” said the report SME Profile: Ownership Demographic Statistics.
Family-run business dropped by 22.6 % since the pandemic that hit in March, 2020. Reported Blacklocks: “Prior to the pandemic a total of 62 % of small and medium sized businesses were owned by couples or members of the same family. The figure fell to 48 % after the pandemic. About 33 % of all small and medium sized enterprises were at least temporary closures due to the pandemic, Blacklocks Reporter reported.
Data compiled by the Federation of Independent Business were based on questionnaires with 19,283 business operators.
