Canadian Small Businesses Market Forecast 2026

Jun 29

2 min read

SMB rising costs and market outlook for 2026

Small businesses are the backbone of Canada’s economy — and if you’re running a team of 1 to 19 employees, you’re part of the group that makes up 91.2% of all employer businesses and employs 4.5 million Canadians. But the latest Statistics Canada report shows that 2026 is shaping up to be a challenging year.

Small businesses are facing higher costs, weaker profitability expectations, and slower hiring plans than larger firms. Here’s what the data says — and what it means for you.

1. Small Businesses Forecasts Expect Rising Costs to Hit Hard

Statistics Canada reports that “nearly two‑thirds (64.0%) expect at least one cost‑related obstacle” over the next three months. For small businesses, the top concerns are:

Rising inflation (48.7%)
Rising cost of inputs (27.1%)
Rising transportation costs (26.0%)

These pressures are hitting small operators harder than large ones because smaller firms have less pricing power and fewer buffers.

If you’re feeling squeezed, you’re not imagining it — the data confirms it.

2. Labour Challenges Are Easing — But Hiring Is fore

casted to be Slowing

Here’s the surprising part: small businesses are less likely to expect labour‑related obstacles than medium or large firms.

But they’re also far less likely to hire.

Only 9.9% of small businesses expect to increase staff in the next three months, compared to 24.6% of large businesses. As the report states, “small businesses are not expecting the same labour pressures as larger businesses.”

This means most small operators are choosing stability over expansion — a sign of caution in a tightening economy.

3. Profitability Expectations Are Dropping

This is the number every owner should pay attention to:

34.1% of small businesses expect profitability to decrease in the next three months.

That’s the highest pessimism across all business sizes.

The report notes: “Smaller businesses are more likely to expect a decrease in profitability.”

With rising costs and cautious consumer spending, margins are under pressure — especially for restaurants, retail, and service‑based businesses.

4. Prices Are Going Up — Because They Have To

Nearly one‑quarter (24.3%) of small businesses plan to raise prices soon. This mirrors 2025 trends and reflects the reality: when costs rise, prices follow.

If you’re considering a price increase, you’re not alone — and the data supports the decision.

5. Optimism Exists — But It’s Lower for Small Firms

Despite the challenges, 65% of small businesses remain optimistic about the next 12 months. But optimism is significantly higher among larger firms.

Small businesses are hopeful — but cautious.