Canada has now logged six consecutive quarters in which business exits outpaced new business creation, according to a new CFIB report.
The quarterly analysis, based on Statistics Canada data, shows the imbalance had reached one of its weakest non-pandemic stretches by mid-2025, with the national exit rate at 5.6% in Q2 2025 while the entry rate later fell to 4.8% in Q4 2025.
Net business entries shows Canada recorded a net loss of 7,067 businesses in Q2 2025, after six straight quarters in which exits exceeded entries.
The organization defines an “entrepreneurial drought” as four or more consecutive quarters in which entry rates are lower than exit rates, meaning Canada is now well past its own warning threshold.
The more structural problem is that this is landing on top of a decades-long decline in business dynamism. CFIB cites Statistics Canada data showing that in 1984, annual business entry rates were roughly 24% and exit rates about 16%. By 2023, both had fallen to around 12%, meaning entry rates have dropped by roughly half since the mid-1980s and are now sitting near historic lows.
Statistics Canada said that in December 2025, the business opening rate fell 0.2 percentage points to 4.8%, while the closure rate held at 4.8%. The number of active businesses slipped 0.1%, or 659 businesses, in the month.
Across 2025, the opening rate ranged from 4.5% to 5.1%, the closure rate ranged from 4.7% to 5.0%, and the monthly average growth rate in active businesses was effectively flat after slowing from 0.33% in 2021 to 0.15% in 2022, 0.05% in 2023, 0.02% in 2024, and near zero in 2025.
CFIB’s owner survey suggests the operating backdrop is now feeding directly into weaker entrepreneurial confidence. More than half of Canadian small and medium-sized firms, 55%, said they would not recommend starting a business right now, up from 53% in 2024. Only 20% said they would recommend it, while 25% said they were unsure.
Further, two-thirds of small firms feel unsupported by their provincial governments, only 3% strongly believe their government has a clear vision for entrepreneurship, and 73% are not confident in the federal government. The group tied that frustration to high costs, tax and payroll pressures, red tape, complex rules, labour challenges and continuing uncertainty.
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