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Canada is now losing more businesses than it’s creating — and the trend has been getting worse since 2024. A new report calls it an “entrepreneurial drought,” pointing to rising costs, heavy regulations, and economic uncertainty pushing small business owners out faster than new ones can start.

More than half of small business owners say they’d discourage others from launching a business right now, with pressure hitting hardest in industries like hospitality, manufacturing, and transportation. Many also say scaling a business has become increasingly difficult, especially once taxes and capital costs kick in.

The report warns that Canadian companies are increasingly being bought up by U.S. firms, as local owners struggle with succession and financing challenges. For cities like Toronto, where small businesses drive neighbourhood culture and economy, the slowdown could reshape the local business landscape.