It’s been nearly a decade since small businesses in Canada have grown as much as they are now, according to the latest data from CIBC Capital Markets.
Released Wednesday (April 19), the new research finds 42 percent of job creation was fueled by businesses with fewer than 100 employees between 2010 and 2016 — up from 30 percent between 2000 and 2010, CIBC Capital Markets said.
Last year alone, more than 350,000 new businesses were created. In a statement, CIBC Deputy Chief Economist Benjamin Tal pointed to the trend in Canada’s SME community as a promising one.
“Beyond the threshold of five employees, there is a clear positive correlation between size and growth, with larger firms within the SME spectrum seeing progressively stronger growth recently,” he said. “What’s more, the share of larger SMEs has risen to a level not seen in almost a decade. Each province from Ontario to B.C. has exhibited a growth rate of more than 9 percent in the number of companies with employees.”
According to Tal, small business optimism has steadily increased after “bottoming out” in early 2016.
“With the Canadian economy in recovery mode, the environment for small businesses remains constructive,” he added.
The news isn’t all good, though, with CIBC identifying gaps in small businesses’ ability to find financing.
“From companies with high growth rates to those with young owners, some SMEs do face more acute issues finding financing,” Tal stated, pointing to female entrepreneurship and youth entrepreneurship as two areas experiencing these gaps.
Further, the report found, Canadians aged 50 to 64 represent about a quarter of the overall population but nearly half of small business owners — and more than half of medium-sized business owners.
“One reason for this discrepancy could be related to their access to financing,” explained Tal. “Remember that companies with younger owners face much more difficulty when trying to externally fund their business. It will be important to watch this segment of the population as Canada tries to compete with other countries in the tech landscape, which is more tilted toward younger business owners than other industries.”