Pillars of the economy – Metro US

Pillars of the economy

Small businesses are more than the thriving backbone of Canada’s economy — they are a testament to the resourcefulness and talent of an increasing number of Canadians.

Defined by Industry Canada as business entities with fewer than 100 employees, small businesses comprise about 98 per cent of all businesses in Canada, proof that entrepreneurs and the self-employed are a fundamental pillar of the Canadian economy.

Still, running a small business can be challenging even in the best of times. Statistics Canada figures show that every year, roughly 150,000 new small businesses are started by Canadians and about 130,000 close down. Less than three-quarters of small businesses survive their first year on average across the country, and only about one-in-five survive until their ninth year.

Numbers are lowest in Atlantic Canada, with only 61 per cent of small businesses surviving their first year, and 15 per cent surviving to their ninth year.

Those numbers may scare even the brave, but with more than 2.35 million small businesses in operation throughout Canada, the overall state of small business in Canada appears healthy.

The face of small businesses ownership in Canada is also changing.

While precise figures are hard to obtain, Statistics Canada estimates 47 per cent of small and medium-sized businesses had at least some female ownership and about 38 per cent of such businesses were majority owned by women.

While women still obviously lag behind men in businesses ownership, more women than men are starting their own businesses, with the number of self-employed women having grown by 23 per cent in the last 10 years compared to 20 per cent growth for men.

“There’s an increasing trend in terms of women owning their own businesses,” said Michel Bergeron, vice-president of corporate relations for the Business Development Bank of Canada.

“They are the fastest-growing segment of entrepreneurs.”

Bergeron believes reduced barriers to starting a business and the prevalence of more female entrepreneurs as role models have been big factors in the rise of women leaders of small business.

Despite the recent recession, small businesses in Canada have weathered the storm well, according to Ted Mallett, vice-president of research at the Canadian Federation of Independent Business.

“Business bankruptcies did not increase during the recession. Small firms as a group came through relatively unscathed,” he said.

Most importantly, small businesses did not shed as many employees as larger firms did, preferring instead to offer employees creative solutions like half-days and part-time employment in order to retain them for the eventual economic recovery.

“Entrepreneurs were quite agile in adjusting to the economic environment — they were resilient from an employment perspective,” Bergeron said.

Across Canada, 59 per cent of businesses are located in Ontario and Quebec, roughly 35 per cent are located in the Western provinces, around 6 per cent are in Atlantic Canada, and only 0.3 per cent are in the Northern territories.