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10 things you (probably) didn’t know about Canadian SMEs

This list proves how entrepreneurs are the engine of Canada’s economy

Read time: 3 minutes

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Small business is big in Canada. Accounting for 99.8% of businesses in this country, small businesses are the engine of the economy and their success is vital to Canada’s prosperity.

What is a SME?

Small and medium-sized enterprises (SMEs) are defined by how many paid employees they have. More specifically:

  • A small business has one to 99 paid employees
  • A medium-sized business has 100 to 499 paid employees
  • A large business has 500 or more paid employees—these companies are not considered SMEs

Here are 10 things you probably didn’t know about SMEs and their impact on Canada’s economy.

1. There are over a million SMEs in Canada

There were 1.22 million SMEs in Canada as of December 2019.

2. Most exporters are SMEs

Out of the 50,000 Canadian establishments that exported goods in 2019, the vast majority (97.4%) were SMEs. They produce 40.6% of the total value of Canadian exports.

3. The majority of private employment is provided by SMEs

Small businesses employed almost 68.8% of private sector workers in 2019, or 8.4 million people across the country.

4. Over half of SMEs are micro-enterprises

More than half of Canadian businesses (54.9%) have fewer than four employees. They are known as “micro-enterprises.”

5. Construction is the sector with the most SMEs

Construction has the highest number of SMEs (148,359), followed by the professional, scientific and technical services sector (147,694) and the retail sector (141,783).

6. Larger provinces have more SMEs

Ontario and Quebec have the most SMEs (449,398 and 254,645, respectively) out of all the Canadian provinces. Prince Edward Island has the fewest (6,455).

7. SMES create 150,000 new jobs per year

Between 2014 and 2019, small businesses contributed to the creation of 472,400 jobs in the private sector—that’s more than 78,733 jobs each year on average.

8. High growth firms are not evenly distributed

These three sectors have the highest concentration of high-growth firms (a firm with at least 10 employees and an average annualized employee or revenue growth greater than 20%, over three consecutive years):

  1. Information and cultural industries
  2. Mining, quarrying, and oil and gas extraction
  3. Administrative and support, waste management and remediation services.

9. Most firms survive longer than five years

Two-thirds (66.9%) of new businesses survive to see their fifth year of operations.

10. Goods-producers have a higher survival rate

However, goods-producing businesses have a higher survival rate than services-producing ones. 10 years after opening, about half (49.0%) of good-producing businesses are still in operation, compared to 44.2% of services-producing businesses.

Source: Innovation, Science and Economic Development Canada.

Discover more research and analysis on issues impacting SMEs and the Canadian economy.

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