A substantial portion of Canadian Small Businesses at Risk of Closing in Near Future
The Canadian Federation of Independent Business (CFIB) updated its earlier estimate that was made this past summer on business closures that now projects one in six (181,000) Canadian small business owners are contemplating permanently closing in the near future. Those potential decisions put approximately 2.4 million jobs at risk—equivalent to 20 per cent of Canada’ private sector jobs. This estimate follows on the 58,000 businesses that closed in 2020 as a result of the pandemic.
Simon Gaudreault, Senior Director of National Research at CFIB, expresses his concern that as more small businesses shut their doors and create more unemployment, the more difficult the economic recovery will be. He states, “Although there is still time for business owners to reverse course if conditions improve, it is alarming to see an increasing number considering permanent closure, compared to our first estimate last summer. We are not headed in the right direction and each week that passes without improvement on the business front pushes more owners to make that final decision”.
The low range of threatened businesses is 71,000 versus 222,000 on the high end (ranging between 7 and 21 per cent of all businesses) that jeopardizes a substantial amount of jobs. Hospitality that includes restaurants and hotels and others and arts and recreation such as gyms are the sectors at most risk, having an even higher ratio of roughly one in three actively considering closure.
The CFIB’s Small Business Recovery Dashboard’s data offers some very concerning numbers about the hard path ahead for Canadian small business owners and their much greater vulnerability than the November survey as shown below:
- 47% of businesses area now fully open, a 15% point decline
- 36% are fully staffed versus 41%, a 5% percentage point decline, and
- 22 % are making normal sales versus 29%.
These declining numbers are worse for some provinces that are under strict lockdown provisions such as Ontario where only 37% of businesses are fully open versus 47% in the broader survey. Other factors declined as well.
“The beginning of 2021 feels more like the fifth quarter of 2020 than a new year,” said Laura Jones, CFIB’s executive vice-president. “It goes without saying that supporting local is more important than ever. Governments can also help small businesses replace subsidies with sales by introducing safe pathways for them to reopen to limited customers. Let’s make 2021 the year we help small business survive and then get back to thriving.”
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