Key Small Business Statistics - July 2005

What is the contribution of small businesses to Canada's exports?

Exporting is vital to Canada's economy, accounting for more than 40% of GDP in recent years. Exports can be a driver of economic growth and are strongly correlated with real GDP growth. Furthermore, exporting can provide a strategically important means of growing a firm by expanding its market beyond the confines of Canada's relatively small domestic market.

Before 2001, the Canadian Exporter Registry (which covers domestically produced merchandise and does not include services) tabulated data by value of exports, not by size of firm. According to this method, small exporters (defined as firms that export less than $1 million annually) only contributed 1.6% of the value of total exports in 2001. The implied conclusion was that small businesses do not make significant contributions to Canada's exports.

New exporter profiles tabulated the data by number of employees for 2002. This new method showed that nearly 85% of Canadian exporters were small businesses (defined as enterprises with fewer than 100 employees). More importantly, small businesses were responsible for 20% of the total value of exports in 2002, with an average value of $2.3 million. Medium-sized businesses accounted for 15% of the total value of exports in 2002 with an average value of $11.8 million, while large businesses accounted for 64% with an average value of $194.5 million in exports. It is clear from the new data that small firms do make a significant contribution to Canada's exports.^{Footnote 14}

However, the proportion of small businesses that export is lower than the proportion of small businesses in the overall economy. Only 1.4% of small businesses export, while 27.0% of medium and 37.7% of large businesses participate in exporting.

Table 15 shows the distribution of the value of exports, by size of firm and industry grouping, in 2002. In all industries outside of the manufacturing and the mining, oil and gas extraction/utilities, small businesses made the largest contribution to exports of any firm size category. In contrast, small businesses only contributed 9% of manufacturing exports while large firms contributed 75% of these exports.

Table 15: Distribution of Total Value of Goods Exports by Industry and Size of Business Enterprise (Number of Employees), 2002

Industry Grouping (NAICS)	Employer Businesses
	Total Value ($ Millions)	Size of Business Enterprise – Number of Employees (Percent of Total)
		Total	1–4	5–9	10–19	20–49	50–99	Small (<100)	100–199	200–499	Medium (100–499)	Large (500+)
Source: Statistics Canada, Canadian Exporter Registry, July 2004. Note: Figures may not add up due to rounding.
Agriculture, Forestry, Fishing and Hunting	3 176	0.9	10.9	6.9	16.7	19.6	12.1	66.2	4.6	9.2	13.8	19.9
Mining, Oil and Gas Extraction/ Utilities	25 739	7.5	0.2	2.4	0.2	7.2	0.3	10.3	4.7	8.1	12.8	77.0
Construction	810	0.2	14.5	14.5	7.7	23.1	21.1	80.9	8.6	8.4	17.0	2.1
Manufacturing	256 128	74.6	0.5	0.3	0.8	2.9	4.5	9.0	7.0	9.3	16.3	74.7
Wholesale Trade	23 209	6.8	8.9	6.9	12.4	18.2	21.2	67.6	8.3	13.0	21.2	11.1
Retail Trade	1 724	0.5	10.3	12.8	8.3	25.7	12.7	69.7	6.8	4.0	10.8	19.5
Transportation and Warehousing	8 600	2.5	2.4	1.2	1.5	2.2	78.8	86.1	0.4	3.7	4.1	9.8
Information and Cultural Industries/ Finance and Insurance	15 689	4.6	81.2	1.6	0.9	1.5	2.5	87.7	2.3	3.9	6.2	6.2
Business Services	5 937	1.7	16.7	6.9	5.1	10.5	7.9	47.1	7.4	7.2	14.6	38.3
Other	2 395	0.7	3.2	1.2	4.4	7.5	4.5	20.8	2.4	3.7	6.1	73.1
Industry Aggregate Total	343 406	100.0	5.2	1.3	1.8	4.7	7.3	20.4	6.5	9.0	15.5	64.2

The distribution of exports by firm size differed a little by destination of exports (Table 16). The United States received 87% of exports and other destinations, principally the European Union and Japan, received 13%. This ratio remained constant, regardless of firm size.

Table 16: Distribution of Total Value of Goods Exports by Destination and Size of Business Enterprise (Number of Employees), 2002

Destination of Export	Employer Businesses
	Total Value ($ Millions)	Size of Business Enterprise – Number of Employees (Percent of Total)
		Total	1–4	5–9	10–19	20–49	50–99	Small (<100)	100–199	200–499	Medium (100–499)	Large (500+)
Source: Statistics Canada, Canadian Exporter Registry, July 2004.
United States
Eastern Seaboard	74 916	21.8	6.1	1.4	1.9	5.9	10.2	25.5	9.0	10.3	19.3	55.3
Industrial Heartland	119 548	34.8	1.9	0.7	1.1	3.2	5.9	12.7	4.1	6.6	10.7	76.6
Midwest	37 647	11.0	5.8	2.4	2.5	6.6	7.5	24.7	9.2	12.1	21.3	54.0
Southeast	23 297	6.8	11.3	1.4	1.9	5.2	7.2	27.0	8.4	11.2	19.6	53.4
West	42 911	12.5	11.7	1.6	2.9	4.8	5.4	26.4	6.3	7.0	13.3	60.3
Total U.S. Exports	298 319	86.9	5.6	1.3	1.8	4.7	7.2	20.5	6.6	8.6	15.2	64.2
Outside the United States
European Union	14 892	4.3	2.8	1.4	1.2	3.0	3.8	12.2	4.9	8.0	12.9	74.9
Japan	9 408	2.7	2.5	2.0	3.6	6.8	10.4	25.4	10.4	13.4	23.8	50.8
Mexico	2 196	0.6	2.5	0.3	1.6	2.3	3.2	9.9	6.2	9.8	16.0	74.0
South America	1 887	0.5	1.1	1.7	2.1	3.0	15.0	22.9	4.0	10.8	14.8	62.2
Other	16 703	4.9	3.5	1.6	2.4	5.1	10.3	22.8	4.3	12.6	16.8	60.4
Total Non-U.S. Exports	45 087	13.1	2.9	1.6	2.2	4.5	8.0	19.2	5.8	11.0	16.9	63.9
Exporter Registry Total	343 406	100.0	5.2	1.3	1.8	4.7	7.3	20.4	6.5	9.0	15.5	64.2

While the majority of exports to the United States went to the Industrial Heartland and the Eastern Seaboard — reflecting the proximity to the large exporting provinces of Ontario and Quebec — small firms tended to concentrate on export to other regions. Small businesses accounted for 27% of exports to the Southeast and 26% to the West, compared with 13% of those to the Industrial Heartland.

Small and medium-sized enterprises accounted for 12% and 13%, respectively, of exports to the European Union, while large firms accounted for 75% of exports to this region. However, small firms accounted for approximately a quarter of Canadian exports to Japan and South America. This suggests that small businesses sent their exports to a broader range of countries than medium-sized and large firms. Large firms may concentrate on a small number of markets in order to take advantage of economies of scale.

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Footnote 14. Export data shown here are at the enterprise level. Tabulating export data at the establishment level results in an even higher contribution by small businesses, because small establishments of large firms are included in the count.