Small business optimism falls as costs climb higher than confidence

Confidence among Canadian small business owners has dropped to its lowest level in four years, with only 58 percent expressing optimism about 2025, according to Zensurance’s 4th annual Small Business Confidence Index.  

This marks a 10-point decline from 2024. 

The survey, which gathered input from more than 1,000 small business owners and independent professionals, revealed that 62 percent believe the state of the economy is hurting their business.  

Rising costs and weaker demand were identified as the main drivers behind the negative outlook. 

“This year's index sends a clear warning: Canadian small business confidence is eroding,” said Danish Yusuf, CEO and Founder of Zensurance.  

He noted that entrepreneurs are struggling to cope with costs, shifting markets, and policy shocks while trying to stay afloat in a difficult economy. 

Rising operational costs stand out as the most pressing concern, cited by 43.2 percent of respondents.  

Economic slowdowns or uncertainty were identified by 34.5 percent, while 22.4 percent pointed to shrinking profit margins.  

Revenue trends further highlight the pressure on small businesses. Just 3.7 percent reported soaring revenues, an 81 percent decline from the previous year. In contrast, 51.5 percent said they are “holding steady,” a 130 percent year-over-year increase. 

The report also pointed to a 24.2 percent decline in the number of small businesses carrying insurance. 

Yusuf said many owners are forgoing coverage not out of preference but because they feel forced to by cost pressures, leaving them exposed during a period of elevated risk. 

Still, some business owners are adapting.  

Nearly 4 in 10 (38.9 percent) reported actively exploring new markets to manage these challenges, a finding that reflects efforts to build resilience despite difficult conditions. 

The survey highlighted the central role of microbusinesses in the economy.  

Among respondents, 62.8 percent operate solo, while another 37.2 percent employ teams of just 2 to 4. Leading sectors included professional services (33 percent), retail, e-commerce and hospitality (17.9 percent), and trades (14.5 percent).  

“This is the real economy,” Yusuf said. “These aren't faceless numbers – they're Canadians grinding every day to build something. This data is their voice, and it's time we paid attention.”