Toronto, April 15, 2026 – More businesses in Ontario and Canada have closed than opened for six consecutive quarters, and more than half (55%) of Ontario and Canadian 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 Ontario and Canada has been declining since the mid-1980s, openings had mostly outpaced business closures. That’s not the case anymore. In Q2 2025, exit rates in Ontario reached 6.7% (5.6% in Canada), while entry rates in Ontario fell to 5.1% (4.8% in Canada) in Q4 2025. This marks some of the highest closure rates and weakest startup activity outside the pandemic.
“This is a wakeup call to all levels of government. If we want a more productive and competitive economy tomorrow, we need more small businesses today,” said Joseph Falzata, CFIB’s Ontario Policy Analyst. “Since 98% of all businesses in Ontario are small, it’s important to maintain the right environment to welcome new small businesses to the province and help nurture their growth.”
The challenges behind the entrepreneurial drought go beyond business entry and exit trends for Ontario businesses. High costs of doing business, an unpredictable economy, trade uncertainty, the overall tax burden, red tape, and labour challenges are making entrepreneurship more difficult and less attractive. All levels of government have a role to play in reviving entrepreneurship in Ontario and across the country.
“Reducing the cost of doing business, eliminating administrative and regulatory burdens, and responding to evolving labour challenges are general ways to address the entrepreneurial drought,” said Julie Kwiecinski, CFIB’s Ontario Director of Provincial Affairs. “While Ontario’s actions to cut small business taxes, reduce red tape, and improve labour mobility will go a long way towards addressing this critical issue, the work of cultivating the province’s job creators never ends.”
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 specific government recommendations to help end Ontario’s and Canada’s entrepreneurial drought.
Visit cfib.ca/drought for more information.
For media inquiries 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 over 103,000 members across every industry and region, including 40,000 in Ontario. 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.