Why Do Small Businesses Fail?

According to Innovation, Science & Economic Development Canada statistics thousands of businesses exit the marketplace every year in Canada. Business failure statistics show that about 96 percent of small businesses (1–99 employees) that enter the marketplace survive for one full year, 85 percent survive for three years and 70 percent survive for five years (Key Small Business Statistics). Approximately 7000 businesses go bankruptevery year in Canada.

Microenterprises (businesses with 1 to 4 employees) have a slightly lower business failure rate than other small businesses; after five years in business, 70.4 percent of micro-enterprises survived compared with 66.9 percent of other small businesses (Ibid).