1, October 2024

How diverse is business ownership in Canada?

A recent report from Statistics Canada has interesting information on who owns businesses in Canada.  There were 6,244,080 businesses in Canada in 2023, of which 5,111,180 (82%) were sole practitioners, leaving 1,132,900 businesses with employees. We will focus on that group.

Of the businesses with employees, most (1,119,900) were small businesses, having 1-99 employees.  10,800 were medium-sized businesses with 100-499 employees, and 2,200 were large businesses with more than 500 employees.

The largest number of businesses in Canada are in real estate rental and leasing; professional, scientific and technical services, and construction.

Immigrants

23% of Canadians were born outside Canada, and they own 26.3% of the businesses.  So, they are slightly overrepresented in business ownership. However, that is skewed towards small businesses. Immigrants own only 8% of the medium sized businesses and 7% of large businesses in Canada.  There is also a breakdown by how long an immigrant has been in Canada, as you might expect, immigrants who have been in Canada for less than 5 years own far fewer businesses, only 2% of the total.

There is an interesting pattern about ownership of large companies. Immigrants who have been in Canada less that ten years own 0.5% of the large companies, but those who have been here more than ten years own 7% of the large companies.

This data does not probe into second or third generation immigrants.  Previous work from the Global Entrepreneurship Monitor has shown that first generation immigrants (who were born outside Canada) have a slightly higher rate of entrepreneurship than the general population (consistent with the StatsCan data). However, second generation immigrants (whose parents were born outside Canada) have a significantly lower rate because their parents want them to be doctors or lawyers or accountants who are typically not entrepreneurs.

The largest number of immigrant owned businesses fall into the following NAICS codes: real estate, rental and leasing; transportation and warehousing and professional scientific and technical services.

Gender

Men represent 49.7% of the Canadian population and own 72% of the businesses, so they are heavily overrepresented.  Women are 50.3% of the population and own 28% of the businesses, so they are heavily underrepresented.  As you might expect from this breakdown, men also own a disproportionate number of the large businesses, 80% of the total.

The largest number of businesses owned by women fall into the following NAICS codes: real estate renting and leasing; professional scientific and technical services; and healthcare and social assistance.

Visible Minorities

Visible minorities represent 26.5% of the population and own 26% of the businesses. So, their ownership is closely aligned with their share of the population.  StatsCan breaks visible minorities into several groups – South Asian (who own 10.6% of the businesses), Chinese (who own 6.1%), Black (who own 1.5%) and Filipino (who own 0.8%).

The largest number of businesses owned by visible minorities fall into the following NAICS codes: real estate renting and leasing; professional scientific and technical services, and construction.

Indigenous People

Indigenous people represent about 5% of the population and own 1.9% of the businesses, so they are underrepresented in business ownership.  Most Indigenous businesses are in Ontario, Quebec, BC and Alberta.

The largest number of businesses owned by visible minorities fall into the following NAICS codes:  real estate rental and leasing; professional scientific and technical services, and construction.

Age

Business ownership peaks in the 50-64 age group as shown in the table below.

 

 

 

 

 

The largest number of businesses owned by people aged less than 30 fall into the following NAICS codes: transportation and warehousing; real estate rental and leasing; and professional scientific and technical services.

Conclusion

Of the four categories examined, two (immigrants and visible minorities) own the number of businesses roughly proportional to their share of the population.  The other two categories (gender and Indigenous background) are heavily skewed, with women and Indigenous people owning far fewer businesses than their share of population.  The summary is shown below.

 

 

 

 

This analysis clearly shows where further assistance relating to business ownership needs to be focused.

Peter Josty