New long-term Research on business start-up and closures in Canada

A recent report from the Government of Canada studied the characteristics and performance of newly established businesses. On average, 96,000 new businesses entered the Canadian economy every year (2002-2014), representing about 9.4% (annual rate) of all Canadian firms.

This study is important for economic development officers (EDOs) undertaking business retention activities as it highlights how the Canadian economy functions, particularly the natural churn that occurs as businesses start, mature, and decline.  Based on this research, EDOs should be able to determine ways to help increase the survival rates of businesses in your communities.

Key findings from this study include:

  • The highest rates of new businesses were in accommodation and food services sectors.
  • New businesses created on average 256,000 new jobs in the first year, representing about 2% of total annual employment.
  • 98% of new businesses survived the first year, however 63% of businesses survived five years, and only 43% are around for their tenth anniversary (graph below).average survival rate
  • The survival and birth rates are different depending on the sector (graph below).  For example, there are few new agriculture, forestry and fishing businesses, and they have an above average rate of survival.  Other sectors with higher birth rates tended to have lower long term survival rates (e.g. accommodation and food services).survival rate 1

The results provide a good look into the nature of business dynamics in the Canadian economy, which can help determine how best to support (or target) business retention and expansion efforts.   For more details and to read the full report, click here.

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