Opinion: Canada faces an entrepreneurial drought

Discussion of Canada’s economic growth is increasingly centred on headline-grabbing investments: new mega-plants, global headquarters and big public subsidies for major projects. But economic strength is not built on billion-dollar deals alone. It is replenished by a steady stream of new businesses, and that stream is dangerously close to drying up.

Business startups have fallen dramatically over the long term in Canada. Since the mid-1980s, business entry rates have dropped by nearly half. More recently, the trend has become even more troubling: since early 2024, more businesses have been closing than opening. In the third quarter of 2025, exit rates reached 5.8 per cent while startup rates fell to 4.9 per cent. Outside of the pandemic, those are among the weakest figures in a decade.

Small- and medium-sized enterprises (SMEs) employ more than 60 per cent of Canada’s private-sector workforce. They are not a niche segment of the economy. When fewer small businesses start, grow and thrive the country loses more than storefronts. It loses competition, innovation, local services and productivity. And our economy becomes less dynamic.

At the Canadian Federation of Independent Business (CFIB), we speak to small-business owners every day, not only through surveys and data collection, but directly in phone calls, emails and thousands of storefront visits every week. The message we hear has become remarkably consistent: owners of small businesses feel forgotten.

As governments announce large investment deals, big nation-building projects and corporate partnerships, many small-business owners feel they are being left to navigate rising costs, red tape and economic uncertainty on their own. Too many say they have become an afterthought in policy discussions — and that neglect is reflected in declining business confidence.

In a recent CFIB survey, two-thirds of small-business owners said they feel unsupported by their governments. Only three per cent believe their government has a clear vision for entrepreneurship, and just four per cent feel it truly has their back. Little wonder that 55 per cent of CFIB members recently said they would not recommend their children start a small business today.

Meanwhile, governments focus on attracting and retaining big firms with targeted subsidies, sector-specific strategies and investment tax credits aimed at scale. There is a role for these tools. Big firms obviously matter. But policy may have tilted too far in their direction. If governments are serious about improving productivity growth, small businesses must be part of the strategy.