Canada's Entrepreneurial Drought Deepens as Business Closures Outpace Openings
Event summary
- More businesses have closed than opened in Canada for six consecutive quarters as of Q4 2025.
- Exit rates peaked at 5.6% in Q2 2025, while entry rates fell to 4.8% in Q4 2025.
- 55% of small business owners say they would not recommend starting a business right now.
- Only 3% of small firms strongly believe their government has a clear vision for entrepreneurship.
The big picture
Canada is experiencing its first prolonged period of more business closures than openings since the mid-1980s. This trend, exacerbated by high costs, regulatory burdens, and labor challenges, threatens the country's economic competitiveness. The CFIB report highlights a growing disconnect between government policies and the needs of small businesses, which form the backbone of Canada's economy.
What we're watching
- Policy Response
- Whether governments will implement recommended tax reductions and red tape cuts to revive entrepreneurship.
- Economic Impact
- How sustained business closures will affect Canada's economic foundation and productivity.
- Entrepreneurial Sentiment
- The pace at which small business confidence improves following the release of CFIB's second report on April 28, 2026.