Analysis in Brief
Analysis on small businesses in Canada, second quarter of 2026
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Small businesses play a vital role in the Canadian economy. As of 2024, businesses with 1 to 19 employees represented 91.2% of all employer businesses and collectively employed 4.5 million individuals, equivalent to 24.4% of the national employed population. By contrast, businesses with 20 to 99 employees, accounting for 7.4% of businesses, employed 3.7 million individuals, or 20.3% of total employment. Businesses with 100 or more employees made up 1.4% of businesses and employed 10.3 million individuals, representing 55.3% of the total employed
From the beginning of April to early May 2026, Statistics Canada conducted the Canadian Survey on Business Conditions to better understand the current environment that businesses in Canada are operating in and their expectations moving forward. Based on the results of the survey, small
Smaller businesses less likely to hire in the short term
Small businesses are not expecting the same labour pressures as larger businesses. The proportion of businesses with 1 to 19 employees (9.9%) that expect their number of employees to increase over the next three months is significantly lower than businesses with 20 to 99 employees (19.5%) or 100 or more employees (24.6%). This trend remains similar to that observed in the second quarter of 2025.
| Second quarter of 2026 | Second quarter of 2025 | |||||
|---|---|---|---|---|---|---|
| Increase | Stay about the same | Decrease | Increase | Stay about the same | Decrease | |
| percent of businesses | ||||||
| Note: Respondents were asked between April 1 to May 6, 2026 how their number of employees was expected to change over the next three months. Therefore, the three month period could range from April 1 to August 6, 2026, depending on when the business responded. Source: Statistics Canada, Canadian Survey on Business Conditions, second quarter of 2026 (table 33-10-1138-01) and second quarter of 2025 (table 33-10-0980-01). |
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| All employment sizes | 11.3 | 81.3 | 7.4 | 10.8 | 81.4 | 7.8 |
| 1 to 19 employees | 9.9 | 82.9 | 7.2 | 9.0 | 83.5 | 7.5 |
| 20 to 99 employees | 19.5 | 71.6 | 8.9 | 22.4 | 67.6 | 10.0 |
| 100 or more employees | 24.6 | 70.1 | 5.4 | 20.1 | 72.6 | 7.3 |
In addition to employment expectations, job vacancies are also an important factor to consider in understanding labour-related challenges businesses expect to face. Over the next three months, 3.6% of businesses with 1 to 19 employees expect an increase in their vacant positions. By contrast, 9.3% of businesses with 20 to 99 employees and 9.1% of businesses with 100 or more employees expect an increase in their vacant positions.
Expected obstacles differ by size of business
Among businesses with 1 to 19 employees, nearly two-thirds (64.0%) expect at least one cost-related
By comparison, while a similar proportion of businesses with 100 or more employees are expecting cost-related obstacles (62.2%), they are more likely to expect labour-related obstacles (49.6%) over the next three months. In particular, the top three obstacles expected by businesses with 100 or more employees over the next three months are rising inflation (43.9%), recruiting skilled employees (39.1%), and rising cost of inputs (30.5%).
| All employment sizes | 1 to 19 employees | 20 to 99 employees | 100 or more employees | |
|---|---|---|---|---|
| percent of businesses | ||||
| Note: Respondents were asked between April 1 to May 6, 2026 about various expected business obstacles over the next three months. Therefore, the three-month period could range from April 1 to August 6, 2026, depending on when the business responded. Source: Statistics Canada, Canadian Survey on Business Conditions, second quarter of 2026 (table 33-10-1139-01). |
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| Rising inflation | 48.8 | 48.7 | 50.0 | 43.9 |
| Rising cost of inputs | 28.4 | 27.1 | 37.6 | 30.5 |
| Rising interest rates and debt costs | 23.5 | 23.4 | 24.9 | 18.5 |
| Recruiting skilled employees | 24.4 | 21.4 | 43.9 | 39.1 |
| Cost of insurance | 23.1 | 23.8 | 20.2 | 9.9 |
| Transportation costs | 26.5 | 26.0 | 29.5 | 27.2 |
| Shortage of labour force | 16.9 | 15.2 | 28.7 | 21.0 |
| Retaining skilled employees | 16.1 | 14.1 | 28.8 | 30.1 |
Negative impacts of tariffs vary slightly between business sizes
Both Canada and the United States imposed tariffs on various products. Businesses were asked the level of impact tariffs had over the last 12 months regardless of whether they exported goods to or imported goods from the United States. Nearly one-third (32.6%) of businesses with 1 to 19 employees reported that U.S. tariffs on goods sold by businesses in Canada had a negative impact on their business, compared to 42.8% of businesses with 20 to 99 employees and 42.7% of businesses with 100 or more employees.
The proportion of businesses by size that experienced a negative impact from Canadian tariffs on goods purchased from the U.S. varies, with a greater proportion of larger businesses reporting a negative impact. Over one-third (33.4%) of businesses with 1 to 19 employees reported a negative impact from Canadian tariffs on U.S. goods, while nearly half (47.5%) of businesses with 20 to 99 employees and over two-fifths (41.5%) of businesses with 100 or more employees reported the same.
Smaller businesses more likely to expect a decrease in profitability
Over one-third (34.1%) of businesses with 1 to 19 employees and one-quarter (24.9%) of businesses with 20 to 99 employees expect a decrease in their profitability over the next three months, compared with 18.6% of businesses with 100 or more employees. The profitability expectations trend among businesses with 1 to 19 employees remains consistent with the second quarter of 2025, while profitability expectations have improved for larger businesses.
| Second quarter of 2026 | Second quarter of 2025 | |||||||
|---|---|---|---|---|---|---|---|---|
| Increase | Stay about the same | Decrease | Not applicable | Increase | Stay about the same | Decrease | Not applicable | |
| percent of businesses | ||||||||
| Note: Respondents were asked between April 1 to May 6, 2026 how their profitability was expected to change over the next three months. Therefore, the three month period could range from April 1 to August 6, 2026, depending on when the business responded. Source: Statistics Canada, Canadian Survey on Business Conditions, second quarter of 2026 (table 33-10-1138-01) and second quarter of 2025 (table 33-10-0980-01). |
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| All employment sizes | 11.3 | 52.8 | 32.7 | 3.2 | 9.9 | 53.8 | 33.7 | 2.5 |
| 1 to 19 employees | 9.8 | 53.5 | 34.1 | 2.5 | 9.4 | 53.9 | 34.5 | 2.2 |
| 20 to 99 employees | 21.3 | 46.3 | 24.9 | 7.5 | 13.5 | 53.3 | 29.1 | 4.0 |
| 100 or more employees | 15.7 | 60.8 | 18.6 | 5.0 | 11.4 | 56.1 | 27.4 | 5.2 |
Nearly a quarter (24.3%) of businesses with 1 to 19 employees and almost one-third (31.2%) of businesses with 20 to 99 employees expect to increase the selling price of goods and services offered over the next three months, while 27.4% of businesses with 100 or more employees anticipate doing the same. These proportions are similar to the second quarter of 2025.
| Second quarter of 2026 | Second quarter of 2025 | |||||||
|---|---|---|---|---|---|---|---|---|
| Increase | Stay about the same | Decrease | Not applicable | Increase | Stay about the same | Decrease | Not applicable | |
| percent of businesses | ||||||||
| Note: Respondents were asked between April 1 to May 6, 2026 how their selling price of goods and services offered was expected to change over the next three months. Therefore, the three month period could range from April 1 to August 6, 2026, depending on when the business responded. Source: Statistics Canada, Canadian Survey on Business Conditions, second quarter of 2026 (table 33-10-1138-01) and second quarter of 2025 (table 33-10-0980-01). |
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| All employment sizes | 25.2 | 64.3 | 6.6 | 3.9 | 26.5 | 62.8 | 7.1 | 3.6 |
| 1 to 19 employees | 24.3 | 65.2 | 7.1 | 3.5 | 25.9 | 63.3 | 7.5 | 3.3 |
| 20 to 99 employees | 31.2 | 58.0 | 3.9 | 7.0 | 30.2 | 59.9 | 4.2 | 5.6 |
| 100 or more employees | 27.4 | 64.4 | 2.8 | 5.5 | 27.3 | 60.1 | 7.8 | 4.8 |
Smaller businesses are less optimistic overall
Despite the challenges posed by economic uncertainty and global geopolitical tensions, nearly two-thirds (65.0%) of businesses with 1 to 19 employees reported having an optimistic outlook over the next 12 months. By contrast, higher proportions of businesses with 20 to 99 employees (78.3%) and 100 or more employees (80.3%) report having an optimistic outlook for the next 12 months.
| Very optimistic | Somewhat optimistic | Somewhat pessimistic | Very pessimistic | Unknown | |
|---|---|---|---|---|---|
| percent of businesses | |||||
| Note: Respondents were asked between April 1 to May 6, 2026 what their expectations would be over the next 12-month period. Therefore, the three month period could range from April 1 to August 6, 2026, depending on when the business responded. Source: Statistics Canada, Canadian Survey on Business Conditions, second quarter of 2026 (table 33-10-1173-01). |
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| All employment sizes | 22.4 | 44.4 | 15.8 | 5.1 | 12.3 |
| 1 to 19 employees | 21.3 | 43.7 | 16.2 | 5.5 | 13.3 |
| 20 to 99 employees | 29.0 | 49.3 | 13.7 | 2.5 | 5.5 |
| 100 or more employees | 32.2 | 48.1 | 8.2 | 1.7 | 9.8 |
Methodology
From April 1 to May 6, 2026, representatives from businesses across Canada were invited to complete 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. Proportions are estimated using calibrated weights to calculate the population totals in the domains of interest. The total sample size for this iteration of the survey is 21,105 and results are based on responses from a total of 9,251businesses or organizations.
References
Statistics Canada. 2025. Canadian Survey on Business Conditions second quarter of 2025.
Statistics Canada. 2026. Canadian Survey on Business Conditions second quarter of 2026.
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