Key Small Business Statistics - July 2006

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

Exporting is vital to Canada's economy, accounting for more than 40 percent 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.

New exporter profiles tabulated the data by size of firm (number of employees) for 2002.^{Footnote 21} This new method showed that nearly 85 percent of Canadian exporters were small businesses (defined as enterprises with fewer than 100 employees).^{Footnote 22} More importantly, small businesses were responsible for 20 percent of the total value of exports in 2002, with an average value of $2.3 million. Medium-sized businesses accounted for 15 percent of the total value of exports in 2002, with an average value of $11.8 million, while large businesses accounted for 64 percent, 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 23}

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

Table 16 shows the distribution of the value of exports, by industry grouping, destination and size of firm in 2002. In all industries except manufacturing and mining, oil and gas extraction/utilities, small businesses made the largest contribution to exports of any size firm. In contrast, small businesses only contributed 9 percent of manufacturing exports, compared with 75 percent for large firms.

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

		Employer Businesses
		Total Value ($ millions)	Size of Business Enterprise — Number of Employees (Percent of Total)
			Total	Small (<100)	Medium (100–499)	Large (500+)
Source: Statistics Canada, Canadian Exporter Registry, July 2004. Note: Figures may not add up due to rounding.
Industry Grouping (NAICS)	Agriculture, Forestry, Fishing and Hunting	3 176	0.9	66.2	13.8	19.9
	Mining, Oil and Gas Extraction/Utilities	25 739	7.5	10.3	12.8	77.0
	Construction	810	0.2	80.9	17.0	2.1
	Manufacturing	256 128	74.6	9.0	16.3	74.7
	Wholesale Trade	23 209	6.8	67.6	21.2	11.1
	Retail Trade	1 724	0.5	69.7	10.8	19.5
	Transportation and Warehousing	8 600	2.5	86.1	4.1	9.8
	Information and Cultural Industries/ Finance and Insurance	15 689	4.6	87.7	6.2	6.2
	Business Services	5 937	1.7	47.1	14.6	38.3
	Other	2 395	0.7	20.8	6.1	73.1
	Industry Aggregate Total	343 406	100.0	20.4	15.5	64.2
Destination of Export	United States
	Eastern Seaboard	74 916	21.8	25.5	19.3	55.3
	Industrial Heartland	119 548	34.8	12.7	10.7	76.6
	Midwest	37 647	11.0	24.7	21.3	54.0
	Southeast	23 297	6.8	27.0	19.6	53.4
	West	42 911	12.5	26.4	13.3	60.3
	Total U.S. Exports	298 319	86.9	20.5	15.2	64.2
	Outside the United States
	European Union	14 892	4.3	12.2	12.9	74.9
	Japan	9 408	2.7	25.4	23.8	50.8
	Mexico	2 196	0.6	9.9	16.0	74.0
	South America	1 887	0.5	22.9	14.8	62.2
	Other	16 703	4.9	22.8	16.8	60.4
	Total Non-U.S. Exports	45 087	13.1	19.2	16.9	63.9
	Exporter Registry Total	343 406	100.0	20.4	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 percent of exports and other destinations, principally the European Union and Japan, received 13 percent. This ratio remained constant, regardless of firm size.

While the majority of exports to the United States went to the industrial heartland and the Eastern seaboard — reflecting 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 percent of exports to the southeast United States and 26 percent to the West, compared with 13 percent for the industrial heartland.

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

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Footnote 21. For more information, please refer to D. Halabisky, B. Lee and C. Parsley, "Small Business Exporters: A Canadian Profile", Industry Canada, 2005, at www.ic.gc.ca/sbresearch.

Footnote 22. 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 percent of the value of total exports in 2001. The implied conclusion was that small businesses do not make significant contributions to Canada's exports.

Footnote 23. 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.