In a recent report, the Canadian Federation of Independent Business lamented Canada’s “entrepreneurial drought,” as the ranks of new businesses continue to fall short of the number of companies going out of business. Specifically, the CFIB finds that more businesses have been disappearing than entering the market in Canada since early 2024, with the gap widening over the course of 2025 and into 2026.
Nationally, “business entry rates have plummeted by nearly 50% since the mid-1980s and remain stuck at historic lows.” The picture across the provinces varies, although all have experienced a slowdown in business start-ups measured relative to the total number of businesses operating in the jurisdiction since the end of 2023.
Evidence of an emerging “entrepreneurial drought” should be taken seriously by policymakers at all levels. New enterprises are a critical ingredient in building a thriving and innovative economy. It follows that a slowdown in new venture formation – and a pattern where business exits exceed the entry of nascent firms – should be taken as a warning sign that all is not well with the broader economic and business environment. Entrepreneurship and new firm entry are vital sources of business dynamism, which in turn is an important driver of productivity growth, efficiency gains, and – ultimately – a higher standard of living.
The data for B.C. point to a marked deceleration in net business formation – business start-ups minus closings -- in the last two years, following a brief post-pandemic surge that lasted until mid-2023. Alberta saw an erosion in overall business dynamism in the wake of the 2014-15 oil price collapse, with negative net business formation during most of the period from 2015 through 2019. As in other provinces, CFIB’s tracking indicates that Alberta has also experienced negative net business formation over the last 18 months, despite a relatively strong economy.
Figure 1 presents data as of the first quarter of 2026 on the numbers of “continuing businesses,” start-ups, and closings/exits for Canada, B.C. and Alberta. Businesses are defined as all enterprises with at least one paid employee; tiny one-person shops with no paid staff are not included. “Continuing” businesses are those that were operating in the previous month as well as when Statistics Canada’s business count was undertaken.
Figure 1
Construction represents a sizable slice of the business landscape in all parts of Canada. Figure 2 provides data on the number of construction companies operating in B.C. and Alberta as of 2025. In both provinces the vast majority of these construction businesses are classified as either “micro” (1-4 employees) or “small” (5-99 employees) enterprises. This underscores the reality that in Canada, the construction industry is a hot-bed for entrepreneurship. The high proportion of small businesses populating the construction industry reinforces the importance of creating an economic environment that supports entrepreneurs and fosters a healthy rate of company formation.
Figure 2