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What’s happening and how to fight back
Small businesses are the heart of Canada’s economy, but they’re facing a tough reality. The number of entrepreneurs and small business owners is shrinking, squeezed by higher costs, staffing struggles, and shifting consumer habits. If you’re feeling the pressure, you’re not alone. Plus, there are practical steps to fighting back.
Why small businesses are disappearing in Canada
1. Rising costs are eating into margins
From rent to raw materials, prices have climbed faster than many small businesses can adjust. Inflation peaked at 8.1% in 2022. While it has slowed, costs remain well above pre-pandemic levels.
What you can do:
- Review expenses quarterly to cut waste.
- Negotiate supplier contracts or explore local alternatives.
- Adjust pricing strategically and communicate the value you provide.
2. Labour shortages make growth harder
Nearly half of Canadian small businesses report difficulty hiring skilled workers. Many owners are wearing too many hats, which leads to burnout and stalled growth.
What you can do:
- Offer flexible schedules or remote work to attract talent.
- Upskill existing staff instead of relying solely on new hires.
- Use automation tools for repetitive tasks, such as payroll and invoicing.
3. Consumer habits are shifting
E-commerce, subscription services, and global competitors have changed how Canadians shop. Businesses that rely solely on walk-in customers are struggling to keep up.
What you can do:
- Add an online sales channel or offer local delivery.
- Build a stronger online presence through SEO and social media.
- Offer loyalty programs to keep customers coming back.
4. Access to financing is tightening
Higher interest rates mean more expensive loans, which makes it harder to fund growth or weather slow periods.
What you can do:
- Explore alternative financing options such as community investment funds or fintech lenders.
- Keep financial records up to date to improve loan approval chances.
- Strengthen cash flow with deposits, retainers, or subscription models.
Grow your confidence and your business
The shrinking number of small businesses in Canada is a warning sign, but it is not the end of the story. By keeping a close eye on costs, embracing change, and leaning on community and technology, you can build a more resilient business.
Join the Huumans online community to connect with peers and other small business experts, discover AI-powered tools that give you greater clarity into your business runs and find providers that’ll be there for you every step of the way.
