Key Small Business Statistics - July 2012

Table of contents

• Foreword
• Highlights
• Number of Businesses
  • When is a business "small"?
  • How many businesses are there in Canada?
• Survival
  • How many businesses appear and disappear each year?
    • Bankruptcy statistics
  • How long do small businesses survive?
  • What share of firms are high-growth firms?
• Employment and Earnings
  • How many people work for small businesses?
  • How many jobs do small businesses create?
  • How much do employees of small businesses earn?
• Contribution to GDP
  • What is the contribution of small businesses to Canada's gross domestic product?
• Self-Employment
  • Who is self-employed?
  • How many people are self-employed?
  • How has self-employment contributed to job creation?
  • Do the self-employed work longer hours than employees?
• Women in Business
  • How many small business entrepreneurs are women?
• Exports
  • What is the contribution of small businesses to Canada's exports?

Foreword

Key Small Business Statistics is a semi-annual publication that provides baseline data on the small business sector in Canada. This eighteenth edition updates data found in previous editions. The following sections have been updated with new data:

• How many businesses are there in Canada?
• How many businesses appear and disappear each year?
• Bankruptcy statistics
• How many people work for small businesses?
• How many jobs do small businesses create?
• How much do employees of small businesses earn?
• What is the contribution of small businesses to Canada's gross domestic product?
• How many people are self-employed?
• How has self-employment contributed to job creation?
• Do the self-employed work longer hours than employees?
• How many small business entrepreneurs are women?
• What is the contribution of small businesses to Canada's exports?

Highlights

Industry Canada's definition of "small business" is firms that have fewer than 100 employees.

Number of Businesses

• There are just over one million small businesses in Canada that have employees (excludes self-employed entrepreneurs). Ninety-eight percent of businesses in Canada have fewer than 100 employees.
• Between 2002 and 2008, about 100,000 new small businesses, on average, were created in Canada each year.
• Taking into account firms that exit the marketplace, the number of firms increased by about 9,000 per year, on average, over the 2002–2008 period.

Contribution to Gross Domestic Product (GDP)

• Small businesses contribute slightly more than 30 percent to Canada's GDP.

Employment

• As of 2011, small businesses employed approximately five million individuals in Canada, or 48 percent of the total labour force in the private sector.
• Small businesses created about 21,000 jobs in 2011. Over the 2001 to 2011 period, small firms accounted for 43 percent of all jobs created, on average, in the private sector.
• Approximately 15 percent of all employed workers in the Canadian economy in 2011 were self-employed.

Earnings

• On average, small business employees in Canada earned around $763 per week in 2011, less than the overall average of $852.

Sectoral Breakdowns

• Small businesses account for over two thirds of employment in five Canadian industry categories: non-institutional health care, forestry, other services, construction, and accommodation and food.
• Roughly 21 percent of small businesses operate in Canadian goods-producing industries; the remaining 79 percent operate in service industries.

Survival

• Survival rates for small and medium-sized businesses (with less than 250 employees) in Canada decline over time. About 85 percent of businesses that enter the marketplace survive for one full year, 70 percent survive for two years and 51 percent survive for five years.
• The number of business bankruptcies in Canada fell by 56 percent between 2000 and 2010 to about 3,600 in 2011.

Growth

• The Organisation for Economic Cooperation and Development (OECD) defines high-growth firms as those with average annualized growth rates greater than 20 percent per year, over a three-year period, and with 10 or more employees at the beginning of the period.
• While a relatively small number of firms (about 13,000) achieved high growth in terms of employment, they created approximately 45 percent of net new jobs over the 2003–2006 period.
• High-growth firms are present in every economic sector and are not just concentrated in knowledge-based industries. The highest concentration of high-growth firms was in professional, scientific and technical services; construction; and administrative and support, waste management and remediation services.

Women in Business

• In 2010, it was estimated that 17 percent of small businesses were majority-owned by women, while 9 percent were owned in equal partnerships between male and female owners.

Exports

• About 86 percent of Canadian exporters were small businesses. In 2010, small businesses were responsible for $77 billion, or about 25 percent of Canada's total value, of exports.
• The largest contributions to exports were in construction (84.3 percent), transportation and warehousing (80.3 percent) and retail trade (80.5 percent).

When is a business "small"?

The size of a business can be defined in many ways, by the value of its annual sales or shipments, its annual gross or net revenue, the size of its assets or the number of its employees.

Many institutions define small businesses according to their own needs—the Canadian Bankers Association classifies a company as "small" if it qualifies for a loan authorization of less than $250,000, whereas the Export Development Corporation defines small or "emerging" exporters as firms with export sales under $1 million. In some instances, Industry Canada has used a definition based on the number of employees, which varies according to the sector—goods-producing firms are considered "small" if they have fewer than 100 employees, whereas for service-producing firms the cut-off point is 50 employees. Above that size, and up to 499 employees, a firm is considered medium-sized. The smallest of small businesses are called micro-enterprises, most often defined as having fewer than five employees. The term "SME" (for small and medium-sized enterprise) refers to all businesses with fewer than 500 employees, whereas firms with 500 or more employees are classified as "large" businesses.

As will be seen, in practice, reporting on small businesses seldom adheres to any strict definition due to data limitations.

How many businesses are there in Canada?

Statistics Canada's Business Register maintains a count of business locations^{Footnote 1} and publishes results twice a year. Business locations can belong to the same company; each company owns at least one business location. For an individual business location to be included in the Business Register, the company to which it belongs must meet at least one of the following minimum criteria: it must have at least one paid employee (with payroll deductions remitted to the Canada Revenue Agency (CRA)), it must have annual sales revenues of $30,000, or it must be incorporated and have filed a federal corporate income tax return at least once in the previous three years.

As of December 2011, there were about 2.4 million business locations^{Footnote 2} in Canada, as shown in Table 1. About half of all business locations are called "employer businesses" because they maintain a payroll of at least one person (possibly the owner). The other half are classified as "indeterminate" because they do not have any employees registered with the CRA. Such businesses may indeed have no workforce (they may simply be paper entities that nonetheless meet one of the criteria for recognition as a business location) or they may have contract workers, family members and/or only the owners working for them. The "indeterminate" category was created because information about their workforce is not available.

Approximately 58 percent of all business locations in Canada are located in Ontario and Quebec. Virtually all the rest are divided between the western provinces (37 percent) and the Atlantic provinces (5 percent). The Northwest Territories, Yukon and Nunavut represent only 0.3 percent of Canada's businesses.

Relative to population, the western provinces, Yukon and Prince Edward Island have more business locations than elsewhere, with the highest ratios in Saskatchewan and Alberta at 90.3 and 89.1 per 1,000 population respectively. Nunavut, Newfoundland and Labrador, New Brunswick and Nova Scotia have the lowest ratios of business locations per 1,000 population. Ontario and Quebec are below the national average of 69.4, with 66.2 and 61.7 business locations per 1,000 population respectively.

In terms of gross domestic product (GDP) per business location by province, Nunavut shows the highest ratio at $2,151,000 per location. (This is likely due, in part, to the low number of business locations per 1,000 residents; therefore, its GDP is spread over fewer business locations).

More broadly, there is a noticeable negative relationship between the number of business locations per 1,000 inhabitants and contribution to GDP per business location in that a higher number of business locations per 1,000 population corresponds to a lower GDP per business location. Alberta is an exception to this rule, with a relatively high GDP per business location as well as a high number of business locations per 1,000 residents.

Of the 1,122,306 employer businesses, 2,528 (about 0.2 percent) have 500 employees or more, 1,100,779 employer businesses (98 percent) have fewer than 100 employees, 75 percent have fewer than 10 employees and 55 percent have only 1 to 4 employees (see Table 2).

About one quarter of all business locations (indeterminate and employer businesses alike) produce goods, whereas the remainder provide services. Small firms (those with fewer than 100 employees) make up 98 percent of goods-producing employer businesses and 98 percent of all service-producing employer businesses (Table 2 and Figure 1). Using an alternative definition of small businesses in the service-producing sector that defines small businesses as those with fewer than 50 employees, small firms account for 96 percent of all service-producing employer firms.

Figure 1: Distribution of Business Locations in the Goods-Producing and Service-Producing Sectors by Firm Size (Number of Employees), December 2011

Source: Statistics Canada, Business Register, December 2011.
Note 1: By conventional Statistics Canada definition, the goods-producing sector consists of North American Industry Classification System (NAICS) codes 11 to 31–33, while NAICS codes 41 to 91 define the service-producing sector.
Note 2: The "indeterminate" category consists of incorporated or unincorporated businesses that do not have a Canada Revenue Agency payroll deductions account. The workforce of such businesses may consist of contract workers, family members and/or owners.

Table 3 shows the distribution of employer businesses by size of business location in each province and territory. Generally speaking, the distribution by size in the provinces is similar to the national average distribution by size. However, there is some variation among the provinces and territories; for example, there is a higher percentage of micro-enterprises (1 to 4 employees) in Alberta (59 percent) and British Columbia (57 percent) than in Ontario (56 percent), Quebec (51 percent) or the territories (from 23 percent to 50 percent).

Table 4 presents the distribution of employer businesses by size of business location in each industry. The greatest variation across industries is found among micro-enterprises. The highest percentage of micro-industries is in professional, scientific and technical services (75.6 percent) and in agriculture, forestry, fishing and hunting (71.9 percent). The lowest percentages of micro-enterprises are found in public administration (22.5 percent), accommodation and food services (27.7 percent) and utilities (33.0 percent).

How many businesses appear and disappear each year?

Thousands of businesses enter and exit the marketplace throughout the year. Keeping track of these births and deaths is no easy matter. Statistics Canada made available data on SMEs in Canada through the Small and Medium-Sized Enterprises Data Warehouse (SMEs Data Warehouse).

Figure 2 shows the number of small businesses (those with fewer than 100 employees) that entered and exited the marketplace annually between 2002 and 2008. Over this period, 99,000 new small businesses, on average, were created in Canada each year. There was no clear pattern of business entries over the period. In 2002, there were approximately 90,000 entries, gradually increasing to a peak of over 115,000 in 2005. This figure fell to 97,000 in 2006 before recovering to 110,000 in 2007. The number of entries dropped significantly in 2008 to about 65,000. The number of exits remained at approximately 86,000 from 2002 to 2004. In 2007 and 2008, the number of exits totalled 180,000, reaching 95,000 in 2008. On a net basis, the average number of entries over the 2002–2008 period was 8,800. In 2006, there were more exits than entries, although not by a significant amount. In 2008, however, there were 30,000 more exits than entries.

Figure 2: Entries and Exits of Small Businesses with up to 100 Employees, 2002 to 2008

Source: Statistics Canada, Small and Medium-Sized Enterprises Data Warehouse, 2011.

How long do small businesses survive?

One way to answer the question of how long small businesses are likely to survive is to determine the probability of survival based on predictable factors. Geographic location, type of industry, size and age are some useful factors in predicting how long a business stays active. Other, unforeseen, factors can also affect the survival of a business, including general economic conditions, as well as market influences such as the number and size of competitors and new entrants.

Survival is defined as the percentage of new firms that continue to operate when they reach a given age. The survival of businesses reflects their productivity, innovation and resourcefulness, as well as their adaptability to changing market conditions.

Figure 3 shows survival rates for Canadian small and medium-sized businesses with fewer than 250 employees. The rates represent the percentage of firms that survived until 2006 and were created one to five years prior to that. About 85 percent of businesses that entered the marketplace in 2005 survived for one full year. Survival rates declined over time. About 70 percent of firms survived for two years, 62 percent survived for three years and 51 percent of firms survived for five years. The fact that half of the businesses survive their first five years of operation suggests that these businesses are able to attain competitive advantage in their markets.

Figure 3: Survival Rates of Canadian Employer Businesses (with fewer than 250 employees), 2001–2006

Source: Statistics Canada, Small and Medium-Sized Enterprises Data Warehouse, 2008.

What share of firms are high-growth firms?

The Canadian economy is dynamic, involving a great deal of churning, i.e., entry and exit of firms. Within this ever-changing environment, start-ups and new firms are very important for creating jobs and wealth. Those firms that achieve high growth in a short period of time tend to make very large contributions in terms of employment and wealth creation. This is one of the reasons for the rising interest in growth firms over the past years among policy-makers and academics.

According to the definition of the Organisation for Economic Cooperation and Development, high-growth firms are those with average annualized growth rates greater than 20 percent per year, over a three-year period, and with 10 or more employees at the beginning of the period. Their growth can be recorded in terms of revenue or employment (number of employees).

Figure 4 illustrates the distribution of all firms based on average annual employment growth between 2003 and 2006. While 4.7 percent^{Footnote 3} of businesses are high-growth firms (defined in terms of employment), they created approximately 45 percent of net new jobs. They are more prevalent in terms of revenue than in terms of employment, with 12 percent of firms achieving high growth in revenues. High-growth firms are present in every economic sector and are not just concentrated in knowledge-based industries. As shown in Figure 5, the highest concentration of high-growth firms for the 2003–2006 period was in professional, scientific and technical services; construction; and administrative and support, waste management and remediation services.

Figure 4: Distribution of all Firms Based on Average Annual Employment Growth, 2003–2006

Source: Statistics Canada, Small and Medium-Sized Enterprises Data Warehouse, 2009; Industry Canada calculations.

Figure 5: Distribution of High-Growth Firms (Employment Growth) by Industry, 2003–2006

Source: Statistics Canada, Small and Medium-Sized Enterprises Data Warehouse, 2009; Industry Canada calculations.

High-growth firms are more likely than other firms to be research and development (R&D) intensive.^{Footnote 4} Over the period 2001–2004, 8 percent of high-growth firms were R&D intensive compared with 4.3 percent of traditional firms. Furthermore, employment for the average high-growth firm grew 87.8 percent compared with 0.1 percent growth for the average non-high-growth firm over the same period.^{Footnote 5}

Figure 6 shows the share of high-growth firms in Canada and ten other countries. Canada ranks fifth, behind the first-ranked United Kingdom (6.4 percent) and third-ranked United States. However, Canada ranks higher than six other countries whose share of high-growth firms ranges from 3.2 to 4.4 percent.

Figure 6: Share of High-Growth Firms (Employment Growth), International Comparisons, 2002–2005

Source: Biosca, A.B., Growth Dynamics, Exploring Business Growth and Contraction in Europe and the U.S. National Endowment for Science, Technology and the Arts (NESTA), 2010.

For more information on high-growth firms, please refer to Growth Map of Canadian Firms, Special Edition: Key Small Business Statistics (January 2010).

How many people work for small businesses?

To best answer this question, it is necessary to look at business establishments as part of the larger enterprise to which they belong, where applicable. Statistics Canada defines a business enterprise as "a family of businesses under common ownership and control for which a set of consolidated financial statements is produced on an annual basis." Statistics Canada's Survey of Employment, Payrolls and Hours (SEPH) covers employer businesses in Canada and reports the number of employees at the enterprise level. Self-employed persons who are not on a payroll are not included in these figures, nor are employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. Firms are grouped into seven size categories: those with fewer than 5 employees, from 5 to 19, from 20 to 49, from 50 to 99, from 100 to 299, from 300 to 499, and 500 and more employees.

According to SEPH data, on average in 2011, just over 5.1 million employees on payroll, or 48 percent of the total private sector labour force,^{Footnote 6} worked for small enterprises (those with fewer than 100 employees) as shown in Table 5. More than 1.7 million, or 16 percent, worked for medium-sized enterprises (those with 100 to 499 employees). In total, therefore, SMEs employed about 6.9 million, or 64 percent, of private sector employees covered by SEPH.

The distribution of employment by size of firm varies considerably across industries. As shown in Table 5 and Figure 7, small businesses account for over two thirds of employment in five industries: the (non-institutional) health care sector (88 percent), forestry (77 percent), other services (75 percent), the construction industry (73 percent), and accommodation and food (66 percent). In three other industries, at least half of the workforce is employed by small businesses. Lastly, in terms of the total number of employees, industries that had the largest number of employees working for small firms were, in order of magnitude, retail trade (0.80 million), accommodation and food (0.71 million), construction (0.62 million), manufacturing (0.53 million), professional services (0.45 million) and wholesale trade (0.38 million). These industries alone accounted for 68 percent of all jobs in small firms in Canada.

Figure 7: Number of Private Sector Employees by Industry and Size of Business Enterprise, 2011 Note ^{1, 2} referrer of Figure 7

Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), April 2012, and calculations by Industry Canada. Industry data are classified in accordance with the North American Industry Classification System (NAICS).
Note 1: SEPH data exclude self-employed workers who are not on a payroll, and employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. The data breaking down employment by size of firm also exclude unclassified industries.
Note 2: Besides the data excluded from the SEPH, the data shown in this figure also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners), and beer and liquor stores. A technical note on the separation of public and private sector employment is available upon request by contacting the Small Business Branch of Industry Canada at SBB-DGPE.

How many jobs do small businesses create?

The data that make it possible to answer this question are derived from Statistics Canada's Survey of Employment, Payrolls and Hours (SEPH). SEPH data exclude self-employed workers who are not on a payroll. Other limitations also apply (see How many people work for small businesses?).

Table 6 displays relative contributions to the net change in private sector paid employment by small, medium-sized and large businesses from 2001 to 2011. Over the years, the relative contribution in terms of size varied greatly. During the period under review, each of the business-size categories played the leading role at different times in net job creation in Canada. For three years, from 2001 to 2002 and in 2010, small businesses made the greatest contribution to net job creation. On the other hand, large businesses played the leading job-creation role from 2003 to 2008. Over the 2001 to 2011 period, small firms accounted for 43 percent of all jobs created, on average, in the private sector.

Table 7 shows year-over-year quarterly changes in paid employment from the third quarter of 2008 to the fourth quarter of 2011 by business size. Jobs were created in the third and fourth quarter of 2008 and were lost in every quarter of 2009 and in the first two quarters of 2010. In the second half of 2008, the rate of job creation averaged about 105,000 jobs per quarter. The number of jobs created started declining significantly in 2008 and became negative in 2009. In 2009, the number of jobs lost increased rapidly from 235,000 jobs lost in the first quarter to 527,000 jobs lost in the third quarter. The decrease in GDP growth was a factor in causing job losses throughout 2009 among businesses of all sizes. The rate of job creation started to recover in the fourth quarter of 2009 and reached positive levels in the third quarter of 2010.

Small businesses lost jobs in each year-over-year period between the first quarter of 2009 and the first quarter of 2010. Small businesses regained jobs in the second quarter of 2010, while medium-sized and large businesses regained jobs in the third quarter of 2010. In 2011, small businesses lost jobs in the second quarter. This occurred mainly in firms with fewer than 20 employees.

Job creation among micro-businesses was the most volatile of the seven firm-size categories. This is the only firm-size category in 2009 that was a source of job creation, when micro-businesses created about 16,000 jobs in the third quarter of 2009. However, micro-businesses shed jobs from the fourth quarter of 2008 to the second quarter of 2009, in the fourth quarter of 2009, in the third quarter of 2010 and in every quarter of 2011.

How much do employees of small businesses earn?

How much do employees of small businesses earn?

Statistics Canada's Survey of Employment, Payrolls and Hours (SEPH) publishes average weekly earnings at the enterprise level based on weekly payroll data. Data include gross pay, as well as overtime and bonuses, commissions and other special payments, before major deductions such as income taxes, employment insurance contributions, etc., but exclude taxable allowances and benefits, and employer contributions to employment insurance, pension plans and other welfare plans. Average weekly earnings are derived by dividing total weekly payrolls by payroll employment (see How many people work for small businesses?). SEPH excludes self-employed persons not on a payroll and does not cover the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. The data shown below also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners), and beer and liquor stores.

In 2011, an average worker in Canada's private sector earned approximately $852 per week (or about $44,304 per year) (Table 8 and Figure 8). Generally, employees' weekly earnings were positively related to the size of the business. Employees working for businesses with fewer than 100 employees earned below the average with weekly earnings of $763 ($39,676 in annual earnings). Those working for medium-sized firms (more than 100 but fewer than 500 employees) also earned below the average with weekly earnings of $832 ($43,264 in annual earnings), whereas those working for large firms (500 employees or more) earned above the average with weekly earnings of $941 ($48,932 in annual earnings). In the service-producing sector, micro-firms had the highest weekly earnings of all small businesses at $784 (or $40,768 per year). This may be because employment in larger small firms is concentrated in the three lowest-paying industries, namely retail trade; accommodation and food services; and arts, entertainment and recreation.

Table 8: Average Weekly Earnings by Firm Size (Number of Employees) in the Private Sector, 2011 Note ^{1, 2} referrer of Table 8

Number of Employees	Private Sector	Goods-Producing Sector Note 2 referrer of Table 8	Service-Producing Sector Note 2 referrer of Table 8
Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), April 2011, and calculations by Industry Canada. Note 1: SEPH data exclude self-employed workers who are not on a payroll, and employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. Data in this figure also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners), and beer and liquor stores. A technical note on the separation of public and private sector employment is available upon request by contacting the Small Business Branch of Industry Canada, SBB-DGPE. Note 2: By conventional Statistics Canada definition, the goods-producing sector consists of North American Industry Classification System (NAICS) codes 11 to 31–33, while NAICS codes 41 to 91 define the service-producing sector.
0–4	$789	$809	$784
5–19	$727	$895	$678
20–49	$771	$967	$705
50–99	$793	$1,017	$714
Small Enterprises (fewer than 100)	$763	$928	$712
100–299	$865	$1,064	$775
300–499	$742	$977	$622
Medium-Sized Enterprises (100–499)	$832	$1,039	$735
Large Enterprises (500 or more)	$941	$1,325	$824
Average	$852	$1,102	$769

Figure 8: Average Weekly Earnings in the Goods-Producing and Service-Producing Sectors by Firm Size in the Private Sector, 2011 Note ^{1, 2} referrer of Figure 8

Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), April 2012, and calculations by Industry Canada.
Note 1: SEPH data exclude self-employed workers who are not on a payroll, and employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. Data in this figure also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners), and beer and liquor stores. A technical note on the separation of public and private sector employment is available upon request by contacting the Small Business Branch of Industry Canada at SBB-DGPE.
Note 2: By conventional Statistics Canada definition, the goods-producing sector consists of North American Industry Classification System (NAICS) codes 11 to 31–33, while NAICS codes 41 to 91 define the service-producing sector.

On average in 2011, employees in the goods-producing sector were paid $333 more per week than those working in the service-producing sector. The difference in earnings between the two sectors was greatest in large firms at approximately $501 per week or an annual average differential of $26,052. However, goods-producing employees also worked longer hours, so the difference in earnings per hour would be less pronounced.

http://www.ic.gc.ca/eic/site/061.nsf/eng/02711.html#q8.1

What is the contribution of small businesses to Canada's gross domestic product?

Gross domestic product (GDP) 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.

The Government of British Columbia's Statistical Service (BC Stats) has developed a method to determine the small business contribution to GDP by province using the income-based approach of the System of National Accounts.^{Footnote 7} Table 9 shows the percentage of small businesses' contribution to GDP (including public and private sectors) for Canada and each province from 2001 to 2010.

BC Stats' definition of small business is restricted to businesses with fewer than 50 employees, plus those operated by the self-employed with no paid employees. By this definition, it is estimated that, in 2010, small businesses accounted for approximately 27 percent of Canada's GDP. The percentage varies from a low of 19 percent in Newfoundland and Labrador to a high of 30 percent in Saskatchewan and British Columbia. Over the 2001 to 2010 period, the contribution of small businesses to GDP increased slightly at the national level from 26 percent in 2001 to 29 percent in 2007 and 2008 and to 28 percent in 2009 and 27 percent in 2010. The largest increase occurred in Saskatchewan, where the GDP contribution was 26 percent in 2001 and 35 percent in 2009. The GDP contribution decreased most in Prince Edward Island, where it fell from 33 percent in 2001 to 26 percent in 2010.

Figure 9 shows the contribution to GDP by firm size for only one year, 2005, using a different methodology. In a recent study, Statistics Canada found that small businesses (here defined as those with 1 to 100 employees) accounted for about 42 percent of private sector GDP and SMEs (those with 1 to 499 employees) accounted for about 54 percent (Figure 9.1). Industry Canada's estimates indicate that, when taking into account both the public and the private sectors, small businesses in the private sector account for about 31 percent of GDP, while medium-sized businesses account for 9 percent (Figure 9.2).

Figure 9: Contribution to GDP by Firm Size, Public and Private Sectors, 2005

Source: Statistics Canada, Small, Medium-Sized and Large Businesses in the Canadian Economy: Measuring Their Contribution to Gross Domestic Product in 2005, June 2011; Industry Canada calculations.

Who is self-employed?

How many people are self-employed?

How many people are self-employed?

In 2011, there were 2.67 million self-employed workers, representing around 15.4 percent of all employed workers in the Canadian economy (Table 10). The number of self-employed reached 2.70 million in the third quarter of 2010, and decreased by the first quarter of 2012 to 2.62 million. Over the past decade, the number of self-employed workers increased by 17 percent, while the growth rate of the overall labour force was 15 percent. Slightly more than one third of self-employed workers were female—the share of female self-employment rose steadily from 1976 to 1998, from 26 percent to 36 percent, and has remained at around 35 percent since 1999.

Table 10: Total Number of Self-Employed Persons (Thousands) by Gender, Yearly and Quarterly, 2001–2012 Note ^{1, 2} referrer of Table 10

Year and Quarter	Total Self-Employment	Self-Employment as a Percentage of Total Employment	Male Self-Employed	Percentage of Self-Employed	Female Self-Employed	Percentage of Self-Employed
Source: Statistics Canada, Labour Force Survey, April 2012. Note 1: Figures for men and women may not add up to total due to rounding. Note 2: Differences between these data and those published in previous versions of Key Small Business Statistics are due to revisions made to data from the Labour Force Survey.
2001	2,276.7	15.2	1,503.3	66	773.4	34
2002	2,314.5	15.1	1,499.7	65	814.7	35
2003	2,401.8	15.3	1,571.1	65	830.7	35
2004	2,453.4	15.4	1,614.5	66	838.9	34
2005	2,511.6	15.5	1,645.6	66	866.0	34
2006	2,498.0	15.2	1,621.4	65	876.6	35
2007	2,615.0	15.5	1,703.2	65	911.9	35
2008	2,629.6	15.4	1,719.7	65	909.9	35
2009	2,701.7	16.0	1,742.3	64	959.4	36
2010	2,669.8	15.7	1,736.3	65	933.5	35
2011	2,670.4	15.4	1,719.7	64	950.8	36
2008 Q1	2,592.6	15.4	1,703.4	66	889.2	34
Q2	2,622.5	15.2	1,705.1	65	917.4	35
Q3	2,646.4	15.3	1,742.7	66	903.7	34
Q4	2,657.0	15.5	1,727.7	65	929.4	35
2009 Q1	2,632.5	15.9	1,710.9	65	921.6	35
Q2	2,685.3	15.9	1,730.7	64	954.6	36
Q3	2,743.0	16.1	1,768.3	64	974.7	36
Q4	2,746.0	16.3	1,759.3	64	986.8	36
2010 Q1	2,674.3	16.1	1,718.6	64	955.7	36
Q2	2,672.9	15.6	1,739.3	65	933.5	35
Q3	2,701.5	15.6	1,765.5	65	936.0	35
Q4	2,647.9	15.5	1,733.2	65	914.7	35
2011 Q1	2,634.6	15.6	1,707.1	65	927.4	35
Q2	2,689.5	15.4	1,734.1	64	955.3	36
Q3	2,689.0	15.3	1,721.6	64	967.3	36
Q4	2,668.7	15.4	1,715.8	64	953.0	36
2012 Q1	2,622.0	15.4	1,693.7	65	928.3	35

Table 11 shows a breakdown of the self-employed in five categories from 2001 to 2011. On average in 2011, of 2.67 million self-employed workers, 68.0 percent had no paid help, 31.3 percent worked with paid help and 0.8 percent were unpaid family workers. Self-employed workers with and without paid help are further categorized according to whether their businesses^{Footnote 8} were incorporated or not. Of those who worked without paid help, 1.3 million or 73 percent were unincorporated in 2011; this category accounted for almost half the total number of self-employed in Canada. In the category with paid help, 73 percent were incorporated. Therefore, the preferred choice of those with paid help is to be incorporated, while those without paid help are mostly unincorporated.

Table 11: Average Annual Number of Self-Employed Persons by Category (Thousands), 2001–2011, and Average Annual Growth Rates (Percent), 1981–2011 Note ¹ referrer of Table 11

Year	Total	With Paid Help			Without Paid Help			Unpaid Family Workers
		Total	Incorporated	Unincorporated	Total	Incorporated	Unincorporated
Source: Statistics Canada, Labour Force Survey, April 2012. Note 1: Differences between these data and those published in previous versions of Key Small Business Statistics are due to revisions made to data from the Labour Force Survey.
2001	2,276.7	787.1	495.3	291.8	1,457.2	304.2	1,153.0	32.4
2002	2,314.4	781.1	497.2	283.9	1,500.8	323.2	1,177.6	32.5
2003	2,401.8	796.2	513.1	283.1	1,571.6	355.3	1,216.3	34.0
2004	2,453.5	835.3	559.4	275.9	1,588.5	384.6	1,203.9	29.7
2005	2,511.5	863.8	590.4	273.4	1,622.1	400.3	1,221.8	25.6
2006	2,498.1	847.9	584.9	263.0	1,621.9	407.9	1,214.0	28.3
2007	2,615.0	855.5	594.8	260.7	1,734.2	448.7	1,285.5	25.3
2008	2,629.7	861.3	603.8	257.5	1,743.1	469.1	1,274.0	25.3
2009	2,701.6	850.6	612.2	238.4	1,829.6	485.2	1,344.4	21.4
2010	2,669.7	841.2	607.7	233.5	1,811.4	490.4	1,321.0	17.1
2011	2,670.4	835.1	612.9	222.2	1,814.7	498.0	1,316.7	20.6
Average Annual Growth Rate, 1981–2011
1981–1991	2.6%	3.2%	3.6%	2.6%	3.1%	6.7%	2.6%	−5.4%
1991–2001	1.7%	−0.5%	−0.1%	−1.2%	3.5%	7.8%	2.6%	−6.1%
2001–2011	1.5%	0.5%	2.0%	-2.4%	2.0%	4.6%	1.2%	−4.0%
1981–2011	2.0%	1.1%	1.9%	−0.4%	3.0%	6.8%	2.3%	−5.5%

The number of self-employed persons with incorporated businesses increased 2.9 percent annually, on average, over the past 10 years (not shown), compared with 1.5 percent for all self-employed. However, there was a great difference in the pattern of growth between incorporated businesses with paid help and those without. The number of incorporated businesses with paid help grew 2 percent annually, on average, between 2001 and 2011. In contrast, the number of incorporated self-employed persons without paid help increased rapidly between 2001 and 2011, at an average annual increase of 4.6 percent.

As shown in Table 11, the total number of self-employed workers in Canada increased at an annual rate of 2 percent between 1981 and 2011 but, as shown in Figure 10, the various categories of self-employed workers experienced slightly different growth rates over that period. For example, in the last two decades, there was negative growth in the category of unincorporated self-employed individuals with paid help. The annual average growth over the entire period was −0.4 percent. The highest growth for self-employed workers without paid help occurred over the 1991–2001 period (3.5 percent). For those with paid help, the highest growth occurred during the 1981–1991 period (3.2 percent).

Figure 10: Self-Employed Persons (Thousands) by Category, 1981-2011

Source: Statistics Canada, Labour Force Survey, April 2012.

Self-employed workers owning incorporated businesses registered the highest growth rates between 1981 and 2011—6.8 percent for businesses without paid employees, followed by unincorporated businesses without paid employees at 2.3 percent and incorporated businesses with paid employees at 1.9 percent.

Three categories experienced growth rates below the 2-percent average, which means their relative importance in terms of self-employed workers diminished. These categories were self-employed workers owning incorporated businesses with paid employees (1.9 percent), unincorporated businesses with paid employees (−0.4 percent) and unpaid family workers (−5.5 percent).

http://www.ic.gc.ca/eic/site/061.nsf/eng/02724.html#q11

How has self-employment contributed to job creation?

How has self-employment contributed to job creation?

Generally, the increasing trend toward self-employment has supported total employment growth. Positive contributions to total net employment growth in the private sector have ranged from 13 percent to 40 percent per year between 2001 and 2011 (Table 12).^{Footnote 9} The number of self-employed workers fell in 2010, which is only the fifth time this has happened over the 1981–2011 period (Figure 11). The other four years were 1986, 2000, 2001 and 2006. In 1982, 1991, 1992 and 2009, self-employment grew, while total employment growth turned negative due to economic recessions. It is interesting to note that the two greatest increases in the number of self-employed persons relative to the overall change in private sector employment occurred at the end of these recessions (in 1983 and 1993)— 167 percent in 1983 and 125 percent in 1993.

Table 12: Private Sector Total Net Employment Change and Net Self-Employment Change, Year-Over-Year, 2001–2011 Note ^{1, 2, 3} referrer of Table 12

Year	Private Sector Total Net Employment Change (thousands)	Private Sector Employees		Self-Employed Persons
		Net Change (thousands)	Percentage of Total Private Sector Employment Change	Net Change (thousands)	Percentage of Total Private Sector Employment Change
Source: Statistics Canada, Labour Force Survey, April 2012. Note 1: (−) indicates a negative contribution to total net employment change. Note 2: Net change figures may not add up to total net change due to rounding. Note 3: Differences between these data and those published in previous versions of Key Small Business Statistics are due to revisions made to data from the Labour Force Survey.
2001	138.3	235.4	170	−97.1	−70
2002	298.9	261.1	87	37.8	13
2003	315.0	227.6	72	87.3	28
2004	186.2	134.7	72	51.5	28
2005	144.1	85.9	60	58.2	40
2006	240.0	253.6	106	-13.6	-6
2007	297.3	180.2	61	117.1	39
2008	117.7	103.1	88	14.6	12
2009	−264.6	−336.6	127	72.1	−27
2010	92.9	124.9	134	-31.9	-34
2011	213.2	212.6	100	0.7	0

Figure 11: Private Sector Total Net Employment Change and Net Self-Employment Change, Year-Over-Year (Thousands), 1981-2011

Source: Statistics Canada, Labour Force Survey, April 2012.

http://www.ic.gc.ca/eic/site/061.nsf/eng/02725.html#q12

Do the self-employed work longer hours than employees?

Do the self-employed work longer hours than employees?

The evidence is strong that the self-employed work longer hours than employees; this has been the case since 1991. On average, the self-employed worked 39.5 hours per week in 2011 compared with 35.3 hours for employees. Even more striking is the large difference in those who usually worked over 50 hours per week in 2011— 30.3 percent of self-employed persons worked over 50 hours compared with less than 4.1 percent of employees (Figure 12).

Figure 12: Percentage Distribution of Usual Weekly Hours Worked by Employees and the Self-Employed, 1991, 2001 and 2011

Source: Statistics Canada, Labour Force Survey, April 2012.

When it comes to working part-time (less than 30 hours per week), the self-employed differ from employees—23.0 percent of the self-employed and 18.4 percent of employees worked part-time in 2011. These differences between the self-employed and employees persisted over the 1991–2011 period, although there has been some abatement in the tendency of the self-employed to work over 50 hours per week since 2001. As well, there has been a small change in the proportion of those working part-time, both among the self-employed and among employees.

As shown in Figure 13, there are also major differences between men and women in usual weekly hours worked—men are more likely to work long hours, whereas women are more likely to work part-time. On average, self-employed men worked 43.1 hours per week in 2011 compared with 33.1 hours for self-employed women. Furthermore, 36.6 percent of self-employed men worked over 50 hours in 2011 compared with 19.1 percent of self-employed women. The same pattern applies among employees, although at much lower levels—6.5 percent of male employees worked over 50 hours in 2011 compared with 1.6 percent of female employees.

Figure 13: Percentage Distribution of Usual Weekly Hours Worked by Class of Worker and Gender, 2011

Source: Statistics Canada, Labour Force Survey, April 2012.

Females are more likely to work part-time, whether they are self-employed or are employees. Among the self-employed, 37.5 percent of women worked part-time (less than 30 hours) in 2011 compared with 15.0 percent of men. Among employees, 25.4 percent of women worked part-time in 2011 compared with 11.5 percent of men.

http://www.ic.gc.ca/eic/site/061.nsf/eng/02726.html#q13

How many small business entrepreneurs are women?

There is no easy way to precisely determine the number of entrepreneurs in Canada, much less the number of women entrepreneurs. However, it is possible to estimate the number using available data on self-employment and business ownership.

Statistics Canada's Labour Force Survey reports there were 950,000 self-employed women in Canada in 2011, accounting for about one third of all self-employed persons. (Although not all of the self-employed would identify themselves as entrepreneurs, the number of self-employed women provides an upper limit for the number of female entrepreneurs.^{Footnote 10}) Between 2001 and 2011, the number of self-employed women grew by 23 percent compared with 14-percent growth in male self-employment.

Another way to count entrepreneurs is through business ownership. Industry Canada's Credit Conditions Survey, 2010 distinguishes three types of business ownership based on gender: majority female ownership, equal partnership between male and female owners and majority male ownership.

Employer small businesses (those with 1 to 99 employees) with equal partnerships between male and female owners accounted for 9.3 percent, while 17.1 percent were majority-owned by females. The degree of female ownership varied by industry, but it is clear that the percentage of female-owned businesses lags behind the percentage of majority male-owned businesses in every industry (Figure 14).

Figure 14: Business Ownership Distribution by Gender and Industry, 2010

Source: Industry Canada, Credit Conditions Survey, 2010.

Accommodation and food services industries have the highest share of businesses that are majority-owned by females, at 25 percent, whereas small businesses in agriculture and primary industries have the lowest level, with only 9 percent of businesses majority-owned by females. Professional services and wholesale and retail each accounted for 21 percent of businesses that were majority-owned by females, while the manufacturing sector accounted for 13 percent.

Table 13 shows the degree of female business ownership by region. In 2010, majority female-owned small businesses accounted for 19 percent of all small businesses in Quebec and 18 percent of all small businesses in Atlantic Canada. Majority female-owned small businesses in Ontario accounted for 17 percent, while those in the Prairies and British Columbia each accounted for 15 percent of all small businesses in those regions. While British Columbia was among the regions with the lowest percentage of majority female-owned firms, the region had the highest percentage of firms that were half-owned by women (13 percent).

What is the contribution of small businesses to Canada's exports?

Exporting is vital to Canada's economy and has accounted for close to 40 percent of GDP in recent years, with the exception of 2009 and 2010. In both years, exports of goods and services accounted for 30 percent of GDP, which could be explained by the global recession and the high value of the Canadian dollar. Exports can be a driver of economic growth and are strongly correlated with real GDP 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.

Table 14 shows the distribution of the value of exports by industry and size of firm in 2010. In 2010, the total value of merchandise exports by Canadian enterprises was approximately $326 billion.^{Footnote 11} This represents an increase of about $26 billion (9 percent) compared with 2009. In 2009, there was a reduction in the demand for Canadian goods and other effects of the global recession made 2009 a particularly difficult year for exports. Although the value of exports has not reached pre-recession levels, it did increase in 2010.

In 2010, about 86 percent of Canadian exporters were small businesses compared with 85 percent in 2008 and 87 percent in 1999. More importantly, small businesses were responsible for $77 billion (25 percent) of the total value of exports in 2010, with an average value of $3 million per firm.

Medium-sized businesses accounted for $52 billion (17 percent) of the total value of exports in 2010, with an average value of $14 million per firm. Large businesses accounted for $185 billion (59 percent) of the total value of exports, with an average value of $158 million per firm.

The proportion of small businesses that export (1.3 percent)^{Footnote 12} is lower than the proportion of small businesses in the overall economy (98 percent). There were about 30,000 small business exporters in 2010. In the same year, 19 percent of medium-sized businesses and 43 percent of large businesses exported.

In manufacturing, the largest exporting industry, small businesses contributed about 12 percent to total exports compared with 65 percent from large firms. In industries that accounted for a relatively small share of the total value of exports, small businesses made the largest contribution to exports. The largest contributions were in construction (84.3 percent), transportation and warehousing (83.0 percent) and retail trade (80.5 percent).

For more information on small business exports, please refer to Canadian Small Business Exporters, Special Edition: Key Small Business Statistics (June 2011).