Analysis in Brief
Expectations and economic outlook among businesses majority-owned by immigrants, third quarter of 2022

A variety of different factors impact the ability of Canadian businesses to operate. Geography may play a role, as businesses in one part of the country may face different challenges than those in another; industry characteristics may be a factor, as businesses that operate in one industry may face different obstacles than those in another; the size of a business may also be a significant factor, as barriers faced by smaller businesses may be quite different than those faced by larger businesses. Analogous differences may also surface when looking at different categories of business owners, as different segments of the Canadian population face different challenges at a personal level, and as owners of businesses.

From the beginning of July to early August 2022, Statistics Canada conducted the Canadian Survey on Business Conditions to collect information on the environment businesses are currently operating in and their expectations moving forward. This article explores results from the survey by looking at the businesses majority-owned^Note 1 by immigrants to Canada. As more than half of all immigrants to Canada reside in Ontario, which also has the highest proportion of businesses majority-owned by immigrants, this article will highlight the experiences of immigrant-owned businesses in this province. In the third quarter of 2022, differences in expectations between these businesses and all private sector businesses in Canada were noted in various key areas, such as their overall future outlook on financial position in addition to obstacles faced such as rising costs in real estate, leasing or property taxes and increasing competition. In general, businesses majority-owned by immigrants to Canada felt less confident in these key areas over the next three months and more likely to expect these obstacles.

Immigrants to Canada have generally higher rates of business ownership and self-employment than the Canadian-born population

Immigrants to Canada comprise a significant part of the Canadian population. As of July 2022, immigrants to Canada aged 15 years and over comprised over one-quarter (26.9%) of the Canadian population. Of those immigrants, Ontario is the province of residence for more than half (50.5%) of the immigrants to Canada, three times that of the next highest province, British Columbia at 17.0%.^Note 2 In the third quarter of 2022, businesses majority-owned by immigrants accounted for 24.4% of all private sector businesses in Canada, with the provinces of Ontario (53.3%), British Columbia (21.2%), and Alberta (10.6%) having the highest proportions.

The proportion of majority-ownership of businesses among immigrants is higher than that among the rest of the population. For example, according to a 2016 study, 11.9% of immigrants to Canada aged 25 to 69 years owned either a private incorporated company or were primarily self-employed, compared with 10.1% of the second generation (individuals born in Canada with an immigrant parent) and 8.4% of the third plus generation (all Canadian-born individuals with both Canadian-born parents).^Note 3 In 2016, about 5.2% of immigrants to Canada owned a private incorporated business with employees, compared to 5.0% of the second generation, and 4.0% of the third plus generation.^Note 3 Rates of primary self-employment were also higher among immigrants to Canada at 6.9%, compared to 5.3% among the second generation, and 4.6% among the third plus generation. The higher self-employment rate among immigrants to Canada was partially attributed to their difficulty of finding suitable paid employment.^Note 3

Businesses majority-owned by immigrants less optimistic on economic outlook and expectations for financial performance

Businesses majority-owned by immigrants to Canada were less likely (61.1%) to indicate having an optimistic future outlook over the next 12 months, than all private sector businesses (68.0%). These levels of optimism were similar to the first quarter of 2022, when over three-fifths (62.0%) of businesses majority-owned by immigrants indicated having a positive future outlook.

In the province of Ontario, 65.1% of all private sector businesses had an optimistic future outlook over the next 12 months. Businesses majority-owned by immigrants (59.5%) in Ontario were less likely to have an optimistic future outlook over the next 12 months.

Consistent with these expectations, over one-fifth (20.9%) of businesses majority-owned by immigrants expected their sales to decrease and close to three-fifths (57.7%) expected their operating expenses to increase over the next three months, compared to 15.6% and 50.6% respectively of all private sector businesses. Moreover, nearly one-quarter (23.3%) of businesses majority-owned by immigrants expected a decrease in demand over the next three months, compared to 13.5% of all private sector businesses. As a result, over half (51.1%) of businesses majority-owned by immigrants anticipated a decrease in their profitability over the next three months, compared to less than two-fifths (37.4%) of all private sector businesses.

Additionally, over one-third (37.1%) of businesses majority-owned by immigrants expected a decrease in their cash reserves over the next three months, while three-tenths (30.9%) of all private sector businesses had the same expectations. Businesses majority-owned by immigrants in Ontario were as likely or more to have similar expectations. A similar pattern is also observed for all private sector businesses in Ontario.

Businesses majority-owned by immigrants expect increasing competition as challenges

Businesses majority-owned by immigrants to Canada were more likely than all private sector businesses to expect increasing competition as an obstacle.

While one-quarter (25.1 %) of businesses majority-owned by immigrants expected increasing competition to be an obstacle over the next three months, less than one-fifth (17.1 %) of all private sector businesses had the same expectations. Findings in Ontario were similar, where 26.2% of businesses majority-owned by immigrants expected increasing competition to be an obstacle over the next three months, compared to 20.2% for all private sector businesses.

Businesses majority-owned by immigrants expect rising costs in real estate, leasing or property taxes as obstacles

Businesses majority-owned by immigrants to Canada were more likely than all private sector businesses to expect challenges related to increasing costs in real estate, leasing or property taxes.

Close to one-third (32.4%) of businesses majority-owned by immigrants expected rising costs in real estate, leasing or property taxes to be an obstacle over the next three months, compared to over one-quarter (26.9%) of all private sector businesses that reported this.

The proportion of immigrant-owned businesses in Ontario (30.7%) that expect this to be an obstacle over the next three months was similar to all private sector businesses in Ontario (29.0%). However, these differences were more pronounced in other provinces and territories of Canada, especially in the northern territories. In the Yukon, over two-thirds (36.0%) of businesses majority-owned by immigrants expected rising costs in real estate, leasing or property taxes as obstacles over the next three months, while one-fifth (20.7%) of all private sector businesses in the province had the same expectations. Similar differences were also observed in Nunavut, where nearly one-quarter (24.3%) of businesses majority-owned by immigrants had these expectations compared to 9.3% of all private sector businesses there. These pronounced differences in expectations between businesses majority-owned by immigrants and all private sector businesses were also observed in the provinces of Nova Scotia (31.5%, 17.1%), New Brunswick (30.3%, 20.7%), and Alberta (40.8%, 30.4%).

Businesses majority-owned by immigrants less likely to take on more debt

Over two-fifths (42.6%) of businesses majority-owned by immigrants to Canada reported that they could take on more debt, while close to half (49.3%) of all private sector businesses could. Meanwhile, over two-fifths (42.2%) of businesses majority-owned by immigrants in Ontario reported the same, compared to under half (45.6%) of all private sector businesses in Ontario.

Conversely, over one-third (34.1%) of businesses majority-owned by immigrants to Canada reported that they could not take on more debt, compared to under three-tenths (29.1%) of all private sector businesses that could not. In Ontario, over one-third (35.8%) of businesses majority-owned by immigrants had these expectations, compared to three-tenths (29.7%) of all private sector businesses.

Methodology

From July 4 to August 8, 2022, representatives from businesses across Canada were invited to take part in an online questionnaire about business conditions and business expectations moving forward. The Canadian Survey on Business Conditions uses a stratified random sample of business establishments with employees classified by geography, industry sector, and size. An estimation of proportions is done using calibrated weights to calculate the population totals in the domains of interest. The total sample size for this iteration of the survey is 35,603 and results are based on responses from a total of 17,013 businesses or organizations.

References

Statistics Canada. (2022). Canadian Survey on Business Conditions, third quarter of 2022.

Statistics Canada. (2022). Canadian Survey on Business Conditions, first quarter of 2022.