One in six or a staggering 181,000 Canadian small business owners are seriously contemplating permanently closing, putting more than 2.4 million jobs at risk, new findings released today by the Canadian Federation of Independent Business (CFIB) reveal.
This latest estimate, which amounts to 20% of private sector jobs, is on top of the 58,000 businesses that became inactive in 2020. In total, one in five businesses are at risk of permanent closure by the end of the pandemic, the organization said.
“Although there is still time for business owners to reverse course if conditions improve, it is alarming to see an increasing number considering permanent closure, compared to our first estimate last summer,” said Simon Gaudreault, senior director of national research at CFIB.
“We are not headed in the right direction and each week that passes without improvement on the business front pushes more owners to make that final decision. The more businesses that disappear, the more jobs we will lose and the harder it will be for the economy to recover.”
The number of threatened businesses could be as low as 71,000 or as high as 222,000 (between 7% and 21% of all businesses) depending on how the coming months unfold, jeopardizing between 962,000 and 2,951,000 jobs, the CFIB said.
Businesses in the hospitality (restaurants, hotels, caterers) and arts and recreation (gyms, venues, arcades) sectors are most at risk, with roughly one in three businesses in both sectors actively considering closure.
Including businesses that have already become inactive in 2020, between one in eight (12%) and one in four (26%) businesses in Canada are at risk of permanently closing during this pandemic.
The latest data on the CFIB’s Small Business Recovery Dashboard underscore how precarious the situation for small businesses has become.
It reveals that 47% of businesses are fully open (down from 62% at the end of November), 36% are fully staffed (down from 41% at the end of November), and 22% are making normal sales (down from 29% at the end of November)
These numbers are even lower for provinces under lockdown restrictions. In Ontario only 37% of businesses are fully open, 32% are fully staffed and 18% are making normal sales. The province has the smallest percentage of fully opened businesses in Canada.
“2021 isn’t off to a great start for small business,” said CFIB executive vice president Laura Jones. “After the tough financial and emotional slog to get through a historically difficult year, the beginning of 2021 feels more like the fifth quarter of 2020 than a new year.
“It goes without saying that supporting local is more important than ever. Governments can also help small businesses replace subsidies with sales by introducing safe pathways for them to reopen to limited customers. There is a lot at stake now from jobs, to tax revenue to support for local soccer teams. Let us make 2021 the year we help small business survive and then get back to thriving.”
Read CFIB’s full research snapshot for more details.