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Many of us have heard people say that small local businesses are the backbone of the Canadian economy. But how many of us know how important they really are in keeping the Canadian economy healthy?
Read on to learn more about the importance of local businesses and why we should all support them.
What is a Small Company?
Most of the local companies you find in local communities are small or micro businesses. When a business employs less than five people, it is known as a micro-business. A company with over five but less than 99 employees is classified as a small business. Medium-sized companies have between 101 and 500 employees and companies with over 500 members of staff are large companies.
How Many Businesses in Canada Are Small or Micro Businesses?
The statistics from the Government of Canada show that in 2020 there were 1.22 million businesses that employed staff in Canada. 97.9% of these Canadian businesses were small employer businesses. This represents around 1.2 million businesses in total. Only 1.9% of the companies were medium-sized and a mere 0.2% were large companies.
A further look at the statistics reveals that 55.3% of all local businesses are micro companies employing less than five people, while 18.6% of them employ between five and nine members of staff. This means that nearly 3/4 of all Canadian companies have less than ten members of staff.
Small to Medium-Sized Companies Are Important Contributors to Canada's GDP
Local companies, especially those that are classified as small, make a significant combined contribution to the GDP of Canada. In 2018, the small business sector contributed 37.5% of Canada's GDP. Medium-sized businesses contributed another 14.4%, making the total GDP contribution from companies employing up to 500 members of staff 51.9%.
How Many People do Local Businesses Employ?
The combined employment power of small Canadian companies is huge and therefore vital to the Canadian economy. According to employment statistics published by Statistics Canada, in 2021, local businesses classified as micro or small businesses made up 98.1% of all the employers in Canada.
In 2021, businesses in those categories employed around 10.3 million Canadians, representing 63.8% of the total Canadian workforce. At the same time, medium-sized businesses provided work for 21.1% of Canadian employees, and large businesses employed 15.1% of the workforce. That is 3.4 and 2.4 million people respectively.
Prince Edward Island and Newfoundland and Labrador have the highest percentages of people employed by small to medium-sized companies at 95.9% and 95.6%. The percentages are lowest in Ontario and Quebec with 86.2% and 86.1%. This can be explained by a bigger presence of corporations and multinational companies in these provinces.
How Are Small Businesses Distributed in Canada?
Most of the Canadian small local businesses, over half of them, are in two provinces. Ontario has the biggest number of small businesses, with 439,694. It is followed by Quebec with 250,724 small businesses. British Columbia has the largest number of small businesses in Western Canada, while Nova Scotia has the most in the Atlantic region with 187,697 and 29,561 businesses, respectively.
However, compared to the size of the population, Prince Edward Island has the largest number of small businesses, with 48.7 per one thousand people. Quebec has the least small business with 36.8 per one thousand people.
How Does Your Contribution Help?
When you buy from small local businesses rather than large, often international companies, there are multiple benefits. According to our team at Made in CA, here are a few:
Healthier Economy
By buying from a small Canadian company, you are contributing towards the Canadian GDP. The money you spend will stay in Canada and help strengthen the Canadian economy.
More Money Stays in The Local Community
Shopping with local companies also ensures that more money stays in the local community through taxes and wages. Much of the tax money is used to ensure the smooth operation of public facilities, public transport, and road infrastructure. Without this money, the quality of services in the local area could suffer. For example, it could lead to longer waits for healthcare services, larger class sizes in schools, and a less frequent public transport service.
More Jobs
When you frequently use local shops and visit local restaurants, you are boosting the company’s revenue and confidence, which allows them to employ more staff to meet the growing demand. The suppliers to those companies will also need to increase their production and therefore the number of their employees to meet the demand. So your frequent custom helps to create a positive snowball effect that improves the employment figures in your area.
Better For The Environment
When you shop locally, you are reducing your carbon footprint. Larger shops are often located outside town centers and usually require you to get there by car or by public transport. Cutting out the journey means less pollution.
More Vibrant Local Communities
The more people shop online or at large stores outside town centres, the less need there is for local services. This leads to local high streets with empty premises left to get run down. It is not a pleasant place to spend time in.
Therefore, when you buy from your local shops and eat at local restaurants, you help to create a vibrant community with different alternatives to the large chain stores and restaurants. You are also helping to create a community where people enjoy spending their time.
Conclusion
As the statistics show, local businesses that are categorised either as micro or small businesses really are the backbone of the Canadian economy. If these businesses were to disappear, they would take with them over 60% of jobs and an almost 40% contribution toward the Canadian GPD.
