Canada Facing “Entrepreneurial Drought” as Business Entry Rates Hit Historic Lows, CFIB Reports
Canada’s small business sector is under mounting pressure from two converging crises: a dramatic decline in new business formation and a rising tide of crime targeting entrepreneurs, according to two recent reports from the Canadian Federation of Independent Business (CFIB).
Business Entry Rates Near Historic Lows
The CFIB’s report, titled Canada’s Entrepreneurial Drought, warns that business entry rates have fallen by nearly 50% since the mid-1980s and remain at historic lows. CFIB analyst Joseph Falzata called the findings a “wake-up call” for all levels of government.
“In the second quarter of 2025, exit rates decreased slightly to 5.6%, while entry rates fell to 4.9% in the fourth quarter, marking some of the highest closure rates and weakest start-up activity outside the pandemic,” the report states.
The CFIB describes this persistent gap between business closures and new openings as an “entrepreneurial drought” — one that has shown little sign of improving since it began in 2024.
“This prolonged imbalance between business exits and new entries threatens Canadian innovation, competitiveness and business dynamism,” the report warns.
Falzata emphasized that because small businesses account for 98% of all businesses in Canada, the conditions in which they operate have outsized consequences for the broader economy.
What the CFIB Is Calling For
The federation is urging federal, provincial and municipal governments to take concrete steps to reverse the trend. Its recommendations include:
Crime Adding to the Burden
A separate CFIB report, released on April 8, highlights a parallel challenge: crime has become a daily operational pressure for small business owners across the country.
CFIB analyst Kayode Southwood said many owners are spending thousands of dollars on security cameras and window repairs, diverting resources away from running their businesses. Nearly half of small business owners surveyed reported concerns about the safety of themselves, their staff and their customers.
“Owners should not be spending more time and money managing theft, vandalism and safety risks than running their business,” Southwood said. “The financial strain and emotional toll are exhausting.”
The CFIB is calling on governments to introduce stronger consequences for repeat and organized offenders, streamline crime reporting processes, improve police response times and invest in prevention and recovery supports for affected businesses.
A Structural Challenge With Policy Solutions
Taken together, the two reports paint a picture of a small business environment under significant stress — one shaped by policy choices that governments at multiple levels have the power to address. With small businesses serving as a primary engine of job creation and community economic activity across every region of the country, the trends identified by the CFIB are likely to draw increasing attention from policymakers.
