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Some Facts and Figures on Canada’s Small Businesses

Small businesses are often called Canada’s economic engine. Still, there are many aspects of small business that actually break down how they specifically contribute to the economy.

For example, how much does small business contribute to the country’s gross domestic product? How many small businesses are there and how many people do they employ across the country? Who and what determine the size of a business? It is also fascinating to note what will happen to existing small businesses when their owners retire.

Here are some statistics that will help answer these questions and more:

The size of businesses in Canada, as defined by Industry Canada, is as follows:

1 – 4 employees = Micro-enterprise
5 – 100 = Small business
101 – 499 = Medium-sized business
500 – plus = Large business

The total number of registered employer businesses in Canada (those with at least one employee): 1,138,761 — as of December 2010

Canadians working for small business: 5,137,147; this represents 48.3 percent of Canada’s workforce

Total number of Canadians self-employed in 2010: 2.7 million; the breakdown:

  • Average workweek for employees: 35 hours
  • Average workweek for the self-employed: 40 hours
  • Self-employed Canadians who reported working more than 50 hours per week: 31 percent
  • Employees working past that threshold: 4 percent

How much do small businesses contribute to Canada’s GDP? According to Industry Canada, in 2005, small businesses comprised 42 percent of the country’s private sector GDP. In 2009, British Columbia Statistical Services reported that 28 percent of the country’s total GDP originated from businesses with fewer than 50 employees. These are influential numbers.

With regard to exports, Statistics Canada reported that in 2009, 86 percent of Canadian exporters were small businesses. Small businesses constituted $68 billion in exports — 25 percent of Canada’s total exports. These are also significant figures.

There is a tool to determine whether or not small business owners are confident about Canada’s economy in general — the Canadian Federation of Independent Business (CFIB) Business Barometer Index (BBI). The CFIB’s BBI fell to 61.7 in August of this year — the lowest reading since July 2009. A score of 50 or higher indicates that more business owners foresee a stronger performance in the following year than those who anticipate a weaker one. The index dropped to a low level of below 40 in late 2008 and early 2009.

Small business and retirement

With so many small businesses in operation, an important question to ponder is: what will happen to small businesses when the proprietors retire?

Baby boomers are reaching retirement age in droves and a large number of companies will probably change ownership in the coming years. A recent poll determined that only 24 percent of small business owners surveyed had a succession plan for retirement. That is not a large proportion considering the importance of retirement succession.

Of those polled:

  • 23 percent intended to close their business when they retired;
  • 20 per cent planned to sell their business to a third party;
  • 18 percent proposed transferring the business to a family member;
  • 12 percent planned to sell to a partner or employee;
  • 27 percent were unsure about their retirement plans.

Finally, is the success or failure of small business determined by the number of businesses established in one year? These figures show the ebb and flow of progress over the years:

Stats Canada reports the largest number of new Canadian small businesses established in one year occurred in 2005 was approximately 115,000, while the smallest number established in one year occurred in 2002 at approximately 90,000. The largest number of small businesses that reportedly ceased to exist in a single year was approximately 100,000 in 2006.

Stats Can also noted the net average of small businesses established from 2002 to 2007 was 15,000.

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