Canada Small and Medium-Sized Enterprises Stats – 2016

Canada’s SMEs Stats

 

Business Infographics:

Canadian business statistics provides statistical data on the business sector in Canada, focusing on small and medium-sized enterprises. In this publication, the terms “business” and “enterprise” refer to registered business establishments.

 

The term SMEs stands for ‘Small and Medium-sized Enterprises’.

 

This edition contains the following information:

  • What does SMEs mean in Canada?
  • How many SMEs are there in Canada?
  • How many people work for SMEs?
  • How many businesses appear and disappear each year?
  • What is the share of high-growth firms?
  • What types of financing do SMEs use?
  • How much do SMEs innovate?
  • How do SMEs contribute to Canada’s exports?
  • How do SMEs contribute to Canada’s gross domestic product?
  • As well as additional information and stats.

 

Businesses or enterprises must meet the following criteria:

  • Have at least one paid employee (with payroll deductions remitted to the Canada Revenue Agency);
  • Have annual sales revenues of at least $30,000; and,
  • Have filed a federal corporate income tax return at least once in the previous three years.

 

Innovation, Science and Economic Development Canada – ISED defines a business based upon the number of paid employees. For this reason, self-employed and “indeterminate” businesses are not included in the sample population as they do not have paid employees.

 

 

Canada’s Small and Medium-Sized Enterprises Stats – 2016 | Part 1:

 

Number of businesses in Canada: As of December 2015, the Canadian economy totaled 1.17 million employer businesses. Of these, 1.14 million (97.9 %) were small businesses, 21,415 (1.8 %) were medium-sized businesses and 2,933 (0.3 percent) were large businesses. In 2013, the total number of SME births was 78,430, compared with 83,240 deaths, which resulted in a net decrease of 4,810 businesses. Please see the document below for detailed information.

 

Innovation: Between 2011 and 2013, small businesses accounted for 27% of total research and development expenditures, spending $13.0 billion over the period. In 2014, the highest percentages of SMEs that innovated were found in manufacturing (61.5%), wholesale trade (50.5%) and professional, scientific and technical services (45.0%).

 

Financing: In 2014, 51.3% of SMEs sought external financing, compared with 48.7% that did not request external financing. Lacking both a credit history and the collateral needed to secure a loan, over 80% of start-ups used personal financing to finance their new businesses.

 

Employment: As of 2015, small businesses employed over 8.2 million individuals in Canada, or 70.5% of the total private labour force. By comparison, medium-sized businesses accounted for 19.8% (2.3 million individuals) and large businesses accounted for 9.7% (1.1 million individuals) of the private sector workforce. Small businesses were responsible for the vast majority (87.7%) of net employment change between 2005 and 2015 (1.2 million jobs), compared with 7.7% for medium-sized businesses and 4.6% for large businesses.

 

Export: In 2013, Canada exported goods totaling $420 billion, of which $106 billion (25.2%) was exported by SMEs. In 2014, 73,000 SMEs (11.8%) exported goods and services. At the end of 2015, Canada’s exports of goods and services were 31% as large as GDP and amounted to $611 billion.

 

GDP: In 2014, small businesses contributed an average of 30% to the gross domestic product (GDP) of their province. Small businesses in British Columbia and Alberta contributed the highest share to their provincial GDP at 33% and 32% respectively. Small businesses in Saskatchewan and Quebec contributed 30% to their provincial GDP.

 

Please refer to the document below for additional information on SMEs Statistics Part 1.

 

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Canada Small and Medium-Sized Enterprises Stats – 2016 | Part 2:

 

How many businesses appear and disappear each year? Thousands of businesses enter and exit the marketplace throughout the year. In the PDF document below – figure 1E shows how many SMEs appeared and disappeared in Canada in 2013. The greatest number of SME births (13,820) and deaths (12,590) occurred in professional, scientific and technical services, followed by construction (12,050 births and 11,900 deaths). Mining and oil and gas extraction had the fewest SME births and deaths (780 and 800 respectively). In 2013, the total number of SME births was 78,430, compared with 83,240 deaths, which resulted in a net decrease of 4,810 businesses.

 

What is the share of High Growth Firm in Canada? Firms that achieve high growth in a short period of time tend to make a large contribution in terms of employment and wealth creation. Although policy-makers tend to associate high-growth firms with innovative high-tech firms, the reality, as discussed below, is that they are found across all industrial sectors. In the PDF document below, figure 1F presents percentages (%) of HGFs across different industries between 2010 and 2013 based upon revenue and employment. As illustrated, there are HGFs in every industry.

 

In the goods-producing sector, the greatest proportions of HGFs are found in construction (11.7%) and manufacturing (11.0%). In the service-producing sector, industries with the highest share of HGFs occur in professional and technical services (11.6%), and transportation and warehousing (10.2%). Overall, the proportion of HGFs in terms of revenue is twice as high as the proportion of HGFs based upon employment (7.4% versus 3.4% respectively).

 

The PDF document below will further outline the details of Canada’s HGFs.

 

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Canada Small and Medium-Sized Enterprises Stats – 2016 | Part 3:

 

Financing instruments used by start-up SEMs: SME financing can be broadly divided into formal and informal sources. Informal financing sources include owners’ savings and personal loans taken out by owners. Formal financing comes from debt financing, lease financing, equity financing, trade credit and government grants.

 

Start-up SMEs often lack both a credit history and the collateral needed to secure a loan, which makes informal financing the most common source for new businesses. Over 80% of start-ups used personal financing, 45% used credit from financial institutions and 19% received trade credit from suppliers.

 

Financing instruments used by SEMs for business acquisition: Business acquisitions help secure market share, talent and revenue and serve as an important growth strategy. Financing business acquisitions is similar to financing start-up SMEs in general. As shown in the PDF document below in figure 1H, the most common instrument for financing business acquisitions was credit from personal financing (71%), followed by credit from financial institutions (61%).

 

Please see the PDF document below for financing stats on SMEs.

 

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Canada Small and Medium-Sized Enterprises Stats – 2016 | Part 4:

 

How much do SMEs Innovate? In a world with limited resources, the fastest way for SMEs to boost productivity and economic growth is to innovate. Innovation is often thought to be synonymous with high-technology inventions, but innovative business behaviour encompasses a broad range of practices, including technological inventions and operational optimizations, to turn creative ideas into innovations.

 

The Survey on Financing and Growth of Small and Medium Enterprises, 2014 divides innovations into product, process, organizational and marketing categories. Survey data show that over 41.7% of small businesses and 58.3% of medium-sized enterprises implemented at least one type of innovation.

 

The availability of resources to spend on research and development (R&D) is tied to the size of businesses. While large businesses make up approximately 0.3% of all employer businesses, figure 1I in PDF document below shows that between 2011 and 2013 they accounted for over 50 percent of all R&D spending. Comparatively, despite representing 97.9% of all employer businesses, small businesses accounted for about 27% of total R&D spending.

 

Medium-sized businesses, which make up 1.8% of employer businesses, accounted for about 18% of all R&D spending. It is particularly noteworthy that SME spending on R&D has been consistently declining over the course of the period 2011–2013.

 

Percentage of SMEs Innovating within the Last Three Years by Industrial Sector, 2012–2014:

In the PDF document below – figure 1J shows the percentage of SMEs by industry that have innovated within the last three years. Innovation levels were highest in manufacturing (61.5%), wholesale trade (50.5%) and professional, scientific and technical services (45.0%). Transportation and warehousing, and construction have the lowest percentage of innovative businesses, with only 31.0% and 36.4% of businesses innovating, respectively, within the last three years.

 

Please see the PDF document below for details.

 

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Canada Small and Medium-Sized Enterprises Stats – 2016 | Part 5:

 

How do SMEs contribute to Canada’s export?

Exporting is vital to Canada’s economy. It is a driver of economic growth and is strongly correlated with real gross domestic product growth. Furthermore, exporting can provide a strategically important means of growing a firm by expanding its market beyond the confines of Canada’s relatively small domestic market. Canada’s continued commitment to establishing trade agreements reflects this importance.

 

In 2013, Canada exported goods totaling $420 billion, of which $106 billion was exported by SMEs. More than 37,000 Canadian SMEs were active exporters of goods to a broad array of international destinations. While the majority (over 26,000) of these SMEs exported to only one country, a significant number exported to two and three to five countries (4,200 and 3,700 respectively).

 

Data from the Survey on Financing and Growth of Small and Medium Enterprises, 2014, which captures exports of both goods and services, show that 11.8% (73,000) of SMEs exported in 2014. The percentage of small businesses that export is less than half the percentage of medium-sized enterprises that export, revealing the important role that size plays in determining the propensity of firms to export.

 

As illustrated in in the PDF document below, innovative SMEs tend to outperform non-innovators in terms of exports. This suggests that innovation and exports may be positively correlated, but further research is required to determine the role of product, process, organizational and marketing innovations in exporting.

 

What do small businesses contribute to Canada’s total export?
In terms of destinations in 2014, the figure 1M in the PDF below indicates that the main destination for Canadian SME exports continues to be the United States, which accounted for 88.1% of total exports of small businesses and 96.2% of exports of medium-sized businesses. In 2014, national SMEs also actively exported to China and other Asian countries, which cumulatively accounted for over 25% of exports of small businesses and more than 40 percent of exports of medium-sized enterprises.

 

Compared with medium-sized businesses, the percentage of small enterprises that export is lower in all destination categories except Europe,where the percentage of small and medium-sized exporters is almost identical (31.6% for small businesses versus 31.2% for medium-sized enterprises).

Please see PDF document for additional information.

 

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Canada Small and Medium-Sized Enterprises Stats – 2016 | Part 6:

 

Contribution to Gross Domestic Product – GDP: Gross domestic product is a key measure of economic production that can be used to compare any two industries’ value added, i.e., the value that an industry, through its activities, adds to its inputs. The main advantage of the GDP concept is that it avoids double counting; hence, it is considered superior in gauging economic performance over, for example, revenue, business counts or even employment.

 

Although the studies discussed below expand the scope of the definition of small business to include businesses with no paid employees, the self-employed and indeterminate businesses, there are very few studies available that measure the contribution of small businesses to GDP. Due to the different approaches to measuring GDP, estimates vary greatly.

 

The Government of British Columbia’s Statistical Service (BC Stats) measures the small business contribution to GDP by province using the income-based approach of the System of National Accounts. BC Stats defines small businesses as those with fewer than 50 employees, plus those operated by the self-employed with no paid employees. The summary of BC Stats findings is presented in PDF document below figure 1N, which shows small businesses’ contribution to GDP (including public and private sectors) for Canada and each province in 2014.

 

Based upon BC Stats data, in 2014 small businesses in British Columbia and Alberta contributed the most to GDP at 33% and 32% respectively. This is
above the national average of small businesses contributing 30% to national GDP. Contributions from Saskatchewan and Quebec are equal to the national average. The lowest contributions to GDP by small businesses came from New Brunswick, and Newfoundland and Labrador (25% and 23% respectively).

 

Business Owner Characteristics
In PDF document below – figure 1P indicates that SMEs owned by females are concentrated in the service sector, most commonly in information, administration, health care and recreation;and other services (24.1% and 23.0% respectively). Construction and agriculture/primary have the lowest values for majority ownership by females (5.1% and 6.2% respectively).
Agriculture/primary has the highest share of equal partnerships between male and female owners (32.6%). Wholesale trade and manufacturing have the same proportion of majority ownership by females (8.8%).

 

Please refer to the PDF below for detailed information.

 

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Please note that “Canada’s SMEs Stat” (2014 and 2015) are no longer available, but you could download the guides and infographics available on this website.

 

 

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