Small Business Closures Threaten Economy

One in six (181,000) Canadian small business owners are seriously contemplating permanently closing, putting more than 2.4 million jobs at risk (20 per cent of private sector jobs), says the Canadian Federation of Independent Business (CFIB) in an update to its earlier estimate on business closures this past summer. This latest estimate is on top of the 58,000 businesses that became inactive in 2020. In total, one in five businesses are at risk of permanent closure by the end of the pandemic. "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 more businesses that disappear, the more jobs we will lose and the harder it will be for the economy to recover," says Simon Gaudreault, senior director of national research at CFIB. The number of threatened businesses could be as low as 71,000 or as high as 222,000 (between seven and 21 per cent of all businesses) depending on how the coming months unfold, jeopardizing between 962,000 and 2.9 million jobs. Businesses in the hospitality (restaurants, hotels, caterers) and arts and recreation (gyms, venues, arcades) sectors are most at risk, with roughly one in three businesses in both sectors actively considering closure.