Canada small business closures outpacing new business starts: CFIB

16% of Canadians open to entrepreneurship, but turned off by costs, red tape, report says

Published Apr 15, 2026  •  2 minute read

A man caught up in red tape Photo by Getty Images

OTTAWA — Canada is in the midst of an “entrepreneurial drought.”

Article content

That’s according to a new report released Wednesday by the Canadian Federation of Independent Business (CFIB,) documenting Canada’s ongoing trend of business closures outpacing new business creation.

Article content

Article content

CFIB policy analyst Joseph Falzata called the report a “wake up call” for all levels of government.

“If we want a more productive and competitive economy tomorrow, we need more small businesses today,” he said.

“Since 98% of all businesses in Ontario are small, it’s important to maintain the right environment to welcome new small businesses to the province and help nurture their growth.”

Entrepreneurship on the decline for decades

Released Wednesday, the first volume of the report — entitled Canada’s Entrepreneurial Drought  — shows that business entry rates in Canada have fallen nearly 50% since the mid-1980s, and remain at historic lows.

The most recent drought, the report says, began in 2024 and shows little sign of alleviating.

“In the second quarter of 2025, exit rates decreased slightly to 5.6%, while entry rates fell to 4.8% (fourth quarter of 2025,) marking some of the highest closure rates and weakest start up activity outside the pandemic,” read an excerpt from the report

Article content

Article content

“This prolonged imbalance between business exits and new entries places us in an entrepreneurial drought — a trend that threatens Canadian innovation, competitiveness, and business dynamism.”

The problem, the report says, isn’t one of entrepreneurial will, but an issue of policy, and that’s making people think twice about starting a business in Canada.

“One in two business owners say they would not recommend starting a business today, citing financial risk, regulatory barriers, and doubts about long-term viability,” the report read.

“When entrepreneurs themselves are reluctant to encourage new business creation, the pipeline of new firms weakens, risking a deeper and more persistent drought.”

Read More

1. 

   PREFER THE PANDEMIC: Small business owners fed up with skyrocketing crime

2. 

   Half of small businesses say U.S. no longer reliable trade partner: CFIB

Canadians willing to start businesses, but red tape, cost a barrier

Reversing this drought, the CFIB says, should be considered a national economic priority — with immediate measures needed to strengthen Canada’s business-incubation environment, and restoring the confidence of would-be business owners.

Article content

The report said 16% of Canadians say they’re willing to open a business, but are turned off by high costs and bureaucratic rigamarole.

“Reducing the cost of doing business, eliminating administrative and regulatory burdens, and responding to evolving labour challenges are general ways to address the entrepreneurial drought,” said the CFIB’s Ontario Director of Provincial Affairs Julie Kwiecinski.

“While Ontario’s actions to cut small business taxes, reduce red tape, and improve labour mobility will go a long way towards addressing this critical issue, the work of cultivating the province’s job creators never ends.”

[email protected]

RECOMMENDED VIDEO

Article content