High costs, red tape, labour challenges and never-ending uncertainty discouraging the next generation of entrepreneurs
Halifax, 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 period.
Nova Scotia’s experience reflects these warning signs. While the province was the only one to show modest business dynamism between 2015 and 2019 and experienced a moderately strong recovery following the pandemic through the end of 2024, that momentum has since become subdued. Recent data points to weakening net business entries, suggesting that confidence in entrepreneurship is softening.
“Small business owners are facing record high costs, mounting taxes, and endless red tape, while governments focus elsewhere. You can’t grow an economy by pricing entrepreneurs out of it.” said Louis-Philippe Gauthier, CFIB Atlantic Vice-President. “If we want a stronger, more competitive economy here at home, we need to make it easier, not harder, for entrepreneurs to get started and grow.”
The pressures facing small businesses go well beyond entry and exit trends. Nationally, two thirds of small firms say they feel unsupported by their provincial governments, only 3% strongly believe their government has a clear vision for entrepreneurship, and 73% are not confident in the federal government.
“Left unaddressed, Canada’s entrepreneurial drought will continue to shrink the small business sector, limit job creation, and weaken communities. Governments cannot afford to ignore these warning signs—restoring the conditions for entrepreneurship must become an economic priority.” concluded Gauthier.
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.
Louis-Philippe Gauthier
CFIB Vice-President, Atlantic
506-961-5706
Louis-Philippe.Gauthier@cfib.ca
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, including over 4,200 in Nova Scotia. 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.