Small businesses contribute between 25 and 40 percent to Canada’s GDP. At the end of 2012 there were over 1 million small businesses in Canada that had employees. Specifically, there are 1,107,540
employer businesses in Canada. Of these 1,087,803 are small businesses with 1 to 99 employees. 18,169 are medium-sized businesses with 100 to 500 employees and 1,568 large businesses with more than 500 employees. In other words 98% of businesses in Canada have less than 100 employees. Ontario has 381,001 small businesses, Quebec has 232,531 small businesses, British-Columbia has 169,178 small businesses and Alberta 151,866 small businesses. Ontario, Quebec, BC, and Alberta account for 934,576 (or 86%) of all small businesses in Canada. Of the 1,107,540 employer small-businesses, 55.1 percent have only 1 to 4 employees (also known as micro businesses).
Small businesses employed about 70% of total private labor force – that is more than 7.7 million individuals. More than 80 percent of small businesses that started in 2008 survived for one full year and 72 percent of small businesses that started in 2007 survived for two years. There were 3,200 bankruptcies in 2012, which is 56% lower than 2000.
Approximately 22% of small businesses produce goods. Goods producing businesses include manufacturing, construction, forestry, fishing, mining, quarrying, and oil and gas. The rest of the businesses provide services. Examples of businesses that provide services are wholesale and retail trade, accommodation and food services, professional, scientific and technical services, finance, insurance, real estate and leasing and health care. More than 550,000 (over 50%) small businesses are concentrated in wholesale trade and retail, construction, professional and technical services.
Wholesale and Retail Trade industrial sector is the largest small businesses employer and employs approximately 1.8 million individuals. Accommodation and Food Services is the second largest employer with 1 million employees. Other sectors with large number of employees include Manufacturing, Construction, Technical services and financial services. On an average, small businesses create 100,000 jobs each year and since 2010, over 530,000 jobs have been created by small, medium and large businesses combined.
Approximately 50% – 55% of firms in Canada have 0-10% growth rates and the average growth rate seems to be 5% for manufacturing and service sectors. Approximately 15-20% of all businesses have 11% – 20% growth and only 7.5% to 10% of businesses have more than 20% growth rates (high growth firms). Approximately 25% of all small businesses have zero or negative growth rates.
According to the Organisation for Economic Co-operation and Development (OECD), to qualify as a high-growth firm it must have an average annualized growth rate greater than 20% per year over a three-year period, and it must have 10 or more employees. Growth rates can be recorded in terms of revenue or in terms number of employees. Highest concentrations of high growth firms in Canada are in construction, business, building and other support services and professional, scientific and technical services. Canada has fewer high growth firms as compared to the United States.
Canadian enterprises of all sizes exported goods worth approximately $374 billion in 2011. Small businesses accounted for 23.9 percent, medium-sized businesses accounted for 16.2 percent and large businesses accounted for 59.9 percent. Unsurprisingly, almost 90% of Canadian SMEs export to the United States and only 32% export to Europe. China and Latin America ate emerging export destinations with approximately 20% and 10% small businesses exporting to these countries respectively.
Finally, the manufacturing sector within small businesses has the highest innovation. Transportation and warehousing has the lowest percentage firms innovating. Other sectors with high – level of innovation include knowledge-based industries and professional, scientific and technical services.