THE CHALLENGE
Over 98% of businesses in Canada are small businesses. [1] These enterprises are the backbone of Canada’s economy, driving local development, sustaining communities, and providing employment across urban, rural, and remote regions. A small business is defined as an enterprise with 1 to 99 paid employees, [2] but the majority of the ones in Canada are micro-firms with four or fewer employees, often owner operated and deeply rooted in their communities.
There are 1.34 million small businesses in Canada. [3] Together they employ 6.82 million people nationwide, [4] and contribute about one-third of the GDP generated by the private sector. [5] While many of Canada’s small businesses are located in more populous provinces, per capita there are proportionately more in Yukon, Prince Edward Island, and Western Canada. [6]
In rural and remote areas, where access to services and employment may be limited, small businesses are especially vital to their communities. The closure of even one enterprise can have ripple effects such as reduced access to basic services and weakened social cohesion.
Canadian small businesses are currently facing unique challenges. The country’s aging population is driving a “succession tsunami,” with 76% of business owners planning to exit their businesses within 10 years – a potential exchange of $2 trillion in business assets over the next decade. Yet according to a 2022 survey by the Canadian Federation of Independent Business, only 9% of business owners have a formal succession plan in place. [7] Poorly managed transitions could lead to widespread closures – a blow to any community and one with a disproportionate impact on smaller communities where businesses serve as both economic anchors and cultural hubs.
Small businesses today are also still recovering from the effects of the COVID-19 pandemic. Over 60% of firms experienced revenue declines in 2020, and small businesses were twice as likely as larger ones to report significant losses. [8] Many are still working to rebuild in the face of inflationary pressures, tariffs, and supply chain disruptions. [9] These challenges are especially evident in downtown cores, where shifting consumer habits, hybrid work patterns, and major infrastructure projects have reduced foot traffic and disrupted local commerce.
New businesses are in a particularly difficult situation, especially in smaller municipalities that are more geographically dispersed. Small, rural, and remote communities often lack a permanent, centralized hub for business support and delivery, leaving entrepreneurs without access to mentorship, financing, and professional networks. Younger, innovative firms looking to expand also often struggle to access the needed financing because of their limited tangible assets and management experience. [10]
To address these challenges, communities and organizations across Canada are implementing a range of innovative strategies. This collection highlights several of these solutions:
- Support for succession planning
- Programs and incentives for revitalizing downtown cores
- Entrepreneurship supports to help new and emerging businesses
Initiatives that support succession planning keep vital local enterprises in operation, maintaining continuity of services, employment, and community identity. Mentorship, financing options, and specialized succession planning assistance can help businesses stay in their communities.
Revitalization efforts focus on sustaining downtown cores and commercial districts, often led by Business Improvement Areas (BIAs). BIAs promote and distinguish their districts as business and shopping destinations, and they play an essential role in supporting civic improvements. [11] Across Canada, BIAs provide an avenue for organizing and financing support programs, highlighting how coordinated long-term strategies strengthen the resilience of local businesses.
Entrepreneurship supports play a critical role in nurturing new and innovative businesses. Regional business hubs, incubators, and accelerator programs can help address barriers to long-term success by creating pipelines for innovation and fostering collaboration. These initiatives are particularly important in smaller or remote communities, where limited resources can make it challenging for entrepreneurs to thrive.
Small businesses turn ideas into realities. They make each of our communities unique. A key component of economic growth, they are also social hubs for many neighbourhoods. The initiatives featured in this category address the full life cycle of small business development – from preserving existing enterprises to revitalizing commercial districts and fostering the next generation of entrepreneurs. They are evidence that local organizations are at the forefront in supporting the enterprises that keep their communities running through creative, place-based strategies to sustain and revitalize urban centres, small towns, and rural communities alike.