High costs, red tape, labour challenges and never-ending uncertainty discouraging the next generation of entrepreneurs
Toronto, April 15, 2026 – More businesses in Canada have closed than opened for six consecutive quarters, and more than half (55%) of small business owners say they would not recommend starting a business right now, according to new research by the Canadian Federation of Independent Business (CFIB).
CFIB’s new report, Canada’s Entrepreneurial Drought, Part 1: The Shrinking Business Landscape, is the first in a two-part series examining the growing imbalance between business creation and closures across the country.
The entrepreneurial drought, a sustained period of four or more quarters where business exits outpace new business entries, has been ongoing since early 2024. While the overall trend of business creation in Canada has been declining since mid-1980s, openings had mostly outpaced business closures. That’s not the case anymore. In the second quarter of 2025, exit rates reached 5.6%, while entry rates fell to 4.8% in Q4 2025, marking some of the highest closure rates and weakest startup activity outside the pandemic.
“Small businesses have watched governments hand out billions of dollars to multinationals while ignoring the realities on Main Street. Governments need to wake up. If we want a more productive and competitive economy tomorrow, we need more small businesses today,” said Michelle Auger, CFIB director of trade and marketplace competitiveness. “Small business priorities should be government priorities. That means reducing taxes, cutting red tape, and promoting investment and entrepreneurship across the country.”
The challenges behind the entrepreneurial drought go beyond business entry and exit trends. Two‑thirds of small firms said they feel unsupported by their provincial governments, only 3% strongly believed their government had a clear vision for entrepreneurship, while 73% are not confident in the federal government. High costs, tax and payroll pressures, complex rules, red tape, and ongoing labour challenges against a backdrop of persistent global uncertainty, all make entrepreneurship more difficult and less attractive.
“Canada’s economic foundation is crumbling. Governments need to stop just papering over the cracks and really refocus efforts on policies that improve the small business environment,” said Brianna Solberg, CFIB’s director for the Prairies and the North. “We cannot afford to regulate ambition out of our economy. When more than half of current small business owners are telling you they wouldn’t recommend starting a business, it’s time to listen.”
Part 2 of CFIB’s entrepreneurial drought report series: “Fixing Canada’s Shrinking Business Landscape” will be released on April 28, 2026. Part 2 will provide practical recommendations for governments to help end Canada’s entrepreneurial drought.
Visit cfib.ca/drought for more information.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
Public.affairs@cfib.ca
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.