Key Small Business Statistics - July 2008

Highlights

Industry Canada's definition of "small business" is firms that have fewer than 100 employees.

Number of Businesses

• There are just over 1 million small businesses in Canada that have employees (excludes self-employed entrepreneurs). Ninety-eight percent of businesses in Canada have fewer than 100 employees.
• Each year, approximately 139 000 new small businesses are created in Canada.

Contribution to Gross Domestic Product (GDP)

• On average, small businesses that have fewer than 50 employees contribute about 23 percent to Canada's GDP.

Employment

• As of 2007, small businesses employed approximately 5 million individuals in Canada, or 48 percent of the total labour force in the private sector.
• Small businesses created about 100 000 jobs in 2007, accounting for over 40 percent of all jobs created in Canada. Over the 1997 to 2007 period, small firms accounted for 37 percent of all jobs created, on average, in the private sector.
• Approximately 15 percent of all employed workers in the Canadian economy in 2007 were self-employed.

Earnings

• On average, small business employees in Canada earned around $694 per week in 2007, less than the overall average of $762.

Sectoral Breakdowns

• Small businesses account for over two thirds of employment in five Canadian industry categories: non-institutional health care, construction, accommodation and food, forestry, and other services.
• Roughly 25 percent of small businesses operate in Canadian goods-producing industries; the remaining 75 percent operate in service industries.

Survival

• Failure rates for small businesses in Canada are high for the first three years and decline over time. About 70 percent of small businesses that enter the marketplace survive for one full year; half survive for three years. Approximately 25 percent of small businesses are still operating after nine years.
• The number of business bankruptcies in Canada fell by 50 percent between 1997 and 2007 to about 6300 in 2007.

Women in Business

• It is estimated that 47 percent of small and medium-sized enterprises (SMEs) have some degree of female ownership: 16 percent of SMEs are majority-owned by women, 20 percent are owned in equal partnerships between male and female owners, and 11 percent of SMEs have a minority female ownership.

Research and Development

• In 2003, small businesses in Canada spent just over $3 billion on research and development (R&D).
• As a percentage of revenue, spending on innovation in 2003 by small businesses in Canada was significantly greater than that by larger firms.

E-Commerce

• The overall rate of Canadian firms selling online was 7 percent in 2005, while the overall rate of firms buying online was 43 percent. In both categories, small firms lagged behind large firms. Only 6 percent of small firms sold online compared with 16 percent of large firms. Similarly, online purchases were conducted by 40 percent of small firms, well below the 68 percent of large firms purchasing online.