Canada Is Losing Businesses Faster Than It Creates Them, CFIB Warns
Canada is in the grip of an "entrepreneurial drought," according to a major new report from the Canadian Federation of Independent Business (CFIB) released April 15. More businesses have closed than opened for six consecutive quarters, and more than half of small business owners say they would not recommend starting a business right now.
The Data Behind the Warning
The CFIB defines an entrepreneurial drought as a sustained period in which business exit rates consistently exceed entry rates. According to the report, exit rates reached 5.6 per cent in the second quarter of 2025, while entry rates fell to just 4.8 per cent by the fourth quarter of that year � some of the weakest startup activity and highest closure rates recorded outside of the COVID-19 pandemic.
Why Businesses Are Struggling
The CFIB points to a confluence of pressures squeezing small and medium-sized businesses: high operating costs, elevated payroll taxes, complex regulatory requirements, persistent labour shortages, and global economic uncertainty.
A Crisis of Confidence
Two-thirds of small business owners said they feel unsupported by their provincial governments. Only three per cent strongly believed their government had a clear vision for entrepreneurship. And 73 per cent expressed a lack of confidence in the federal government's ability to support business growth.
"It's time to admit it: we're in an entrepreneurial drought," the CFIB said in its report summary, urging both levels of government to treat the situation as a structural economic emergency rather than a temporary fluctuation.
What Comes Next
The CFIB says Part 2 of its entrepreneurial drought series � focused on policy solutions and government recommendations � will be released on April 28, the same day the federal government tables its spring economic update.
Sources
- CFIB: More businesses have been closing than opening in Canada
- BNN Bloomberg: Canada is losing businesses faster than it can create new ones
- Wealth Professional: Canada in entrepreneurial drought as business closures outpace startups
