Ontario Profile: Small Businesses

When Is a Business “Small”? The size of a business can be defined in many ways, by the value of its annual sales or shipments, for example, or by its annual gross or net revenue, the size of its assets or the number of its employees. Many institutions define small businesses according to their own needs – the Canadian Bankers Association classifies a company as “small” if it qualifies for a loan authorization of less than $250,000, whereas the Export Development Corporation defines small or “emerging” exporters as firms with export sales under $1 million.

In some instances, Industry Canada has used a definition based on the number of employees, which varies according to the sector — goods-producing firms are considered “small” if they have fewer than 100 employees, whereas for service-producing firms the cut-off point is 50 employees. Above that size, and up to 499 employees, a firm is considered medium-sized. The smallest of small businesses are called micro-enterprises, most often defined as having fewer than five employees. The term “SME” (for small and medium-sized enterprise) refers to all businesses with fewer than 500 employees, whereas firms with 500 or more employees are classified as “large” businesses. As will be seen, in practice, reporting on small businesses seldom adheres to any strict definition due to data limitations.

HOW MANY BUSINESSES ARE THERE IN CANADA AND ONTARIO?

Key Small Business Statistics – July 2011

• Total Number of Business Locations in Canada – 2,428,270
• Total Number of Business Locations in Ontario – 901,190 (37% of total in Canada)

Statistics Canada’s Business Register maintains a count of business locations and publishes results twice a year. Business locations can belong to the same company; each company owns at least one business location. For an individual business location to be included in the Business Register, the company to which it belongs must meet at least one of the following minimum criteria: it must have at least one paid employee (with payroll deductions remitted to the Canada Revenue Agency (CRA)), it must have annual sales revenues of $30,000, or it must be incorporated and have filed a federal corporate income tax return at least once in the previous three years.

As of December 2010, there were about 2.4 million business locations in Canada. About half of all business locations are called “employer businesses” because they maintain a payroll of at least one person (possibly the owner). The other half is classified as “indeterminate” because they do not have any employees registered with the CRA. Such businesses may indeed have no workforce (they may simply be paper entities that nonetheless meet one of the criteria for recognition as a business location) or they may have contract workers, family members and/or only the owners working for them. The “indeterminate” category was created because information about their workforce is not available.

BUSINESSES BY SIZE AND INDUSTRY

About 58% of all business locations in Canada are located in Ontario and Quebec. Virtually all the rest are divided between the western provinces (37%) and the Atlantic provinces (6%). The Northwest Territories, Yukon and Nunavut represent only 0.3% of Canada’s businesses.

Relative to population, the western provinces, Yukon and Prince Edward Island have more business locations than elsewhere, with the highest ratios in Alberta and Saskatchewan at 91.9 and 91.8 per 1000 population respectively. Nunavut, Newfoundland and Labrador, New Brunswick and Nova Scotia have the lowest ratios of business locations per 1000 population. Ontario and Quebec are below the national average of 70.8, with 67.8 and 62.5 business locations per 1000 population respectively.

In terms of gross domestic product (GDP) per business location by province, Nunavut shows the highest ratio at $1,793,000 per location. (This is likely due, in part, to the low number of business locations per 1000 residents; therefore, its GDP is spread over fewer business locations.)

More broadly, there is a noticeable negative relationship between the number of business locations per 1000 inhabitants and contribution to GDP per business location in that a higher number of business locations per 1000 population corresponds to a lower GDP per business location. Alberta is an exception to this rule, with a relatively high GDP per business location as well as a high number of business locations per 1000 residents.

Of the 1,138,761 employer businesses, 2708 (about 0.2%) have 500 employees or more, 1,116,423 employer businesses (98%) have fewer than 100 employees, 75% have fewer than 10 employees and 55% have only 1 to 4 employees.

About one quarter of all business locations produce goods, whereas the remainder provide services. Small firms (those with fewer than 100 employees) make up 98% of goods-producing employer businesses and 98% of all service-producing employer businesses. Using an alternative definition of small businesses in the service-producing sector that defines small businesses as those with fewer than 50 employees, small firms account for 96% of all service-producing employer firms.

Notes:

• By conventional Statistics Canada definition, the goods-producing sector consists of North American Industry Classification System (NAICS) codes 11 to 31–33, while NAICS codes 41 to 91 define the service-producing sector.
• The “indeterminate” category consists of incorporated or unincorporated businesses that do not have a Canada Revenue Agency payroll deductions account. The workforce of such businesses may consist of contract workers, family members and/or owners.

The distribution of employer businesses by size of business (number of employees) in Ontario is as follows:

• micro-enterprises (1 to 4 employees) – 55% of total
• businesses with 5 to 9 employees – 19.5% of total
• businesses with 10 to 19 employees –12.0% of total
• businesses with 20 to 49 employees –8.2% of total
• businesses with 50 to 99 employees –2.7% of total

The distribution of employer businesses by size of business location in each industry shows the greatest variation among micro-enterprises. The highest percentage of micro-industries is in professional, scientific and technical services (74.8%) and in agriculture, forestry, fishing and hunting (71.4%). The lowest percentages of micro-enterprises are found in public administration (22.1%), accommodation and food services (27.9%), and utilities (34.1%).

CATEGORY AND NUMBER OF BUSINESSES IN METRO TORONTO

Metro Toronto Businesses Segmentation (147595 results for Toronto)

(Source for research: www.411.ca)

Marketing & Advertising Businesses

Other Businesses:

• General Practice Physicians & Surgeons (2529)
• Dentists (1748)
• Grocery Stores (1196)
• Human Services Organizations (1071)
• Pharmacies (924)
• Special Interest Associations (909)
• Special Education Schools (876)
• Management Consultants (866)
• Convenience Stores (836)
• Dry Cleaners (779)
• Architects (508)
• Building Contractors (902)
• General Contractors (772)
• Janitor Service (762)
• Insurance Companies (737)
• Banks (656)
• Importers (653)
• Secondary & Elementary Schools (575)
• Shutters (560)
• Child Care (501)
• Medical Clinics (498)
• Variety Stores (484)
• Ski Organizations (472)
• Money Orders & Transfers (467)
• Churches (466)
• Video Production Services (413)
• Hospitals (409)
• Investments (404)
• Religious Organizations (388)
• Investment Advisory Service (365)
• VHS, CD, DVD Rental & Sales (353)
• Watch Dealers (350)
• Preschool & Kindergarten (325)
• Gas & Oil Service Stations (309)
• Security Alarms & Monitoring (307)
• Hotels (298)
• Real Estate Developers (297)
• Commercial Artists (294)
• Discount Stores (289)
• Sporting Goods (170)
• Copy & Duplicating Service (269)
• Trucking Transportation Brokers (247)
• Electronics Service & Repair (243)
• Opticians (241)
• Optometrists (229)
• Adult Day Care (225)
• Trucking (222)
• Courier & Delivery Service (219)
• Personal Escort Service (213)
• Newspaper Distributors (212)
• Transportation (206)
• Cellular & Wireless Phones & Service (202)
• Computer Printers (197)
• Bookstores (196)
• Mental Health Services (195)
• Motion Picture Producers & Studios (190)
• Periodical Publishers (189)
• Machine Shops (184)
• Children’s Clothes Retailers (179)
• Carpet & Rug Cleaning & Restoration (175)
• Cheque Cashing Service (174)
• Sound & Video Recording Service (173)
• Publishers (169)
• Telecommunication Equipment & System Parts & Supplies (167)
• Photographic Equipment (166)
• Music Instruction (165)
• Catholic (162)
• Office Furniture (161)
• Social Service Organizations (157)
• Electronics (156)
• Education, Charitable, Research, Etc. Foundations (154)
• Exporters (151)
• Sportswear Wholesalers & Manufacturers (149)
• Labour Organizations (147)
• Veterinarians (144)
• Truck Rental & Leasing (143)
• Television Parts & Service (142)
• Language Schools (140)
• Karate & Other Martial Arts Instruction (137)
• Security Guard & Patrol Service (136)
• Television Station & Program Producers (134)
• Senior Citizens’ Services (132)
• Psychologists (126)
• Jewellery Buyers (124)
• Nurses (123)
• Medical Equipment & Supplies (121)
• Real Estate Appraisers (120)
• Retirement & Life Care Communities & Homes (119)
• Pet Grooming (118)
• Executive Search Service (117)
• Translators & Interpreters (116)
• Outplacement Consultants (115)
• Restaurant Equipment & Supplies (113)
• Foreign Currency Exchange & Brokers (112)
• Shoe Repair & Shine (111)
• Stocks & Bond Brokers (110)
• Second Hand Stores (108)

BUSINESS IMPROVEMENT AREAS

A Business Improvement Area is a geographic area in a municipality. A BIA board of management is an organization set up to provide certain business promotion and improvement functions within that area. A BIA allows local business people and property owners to join together and with the support of the municipality, to organize, finance and carry out physical improvement and promote economic development in their district. The local municipality is the body that is responsible for approving the budget of the BIA.

There are now more than 230 BIAs in place across the province of Ontario. They vary in size from less than 60 businesses and property owners to more than 2,000.

Business Improvement Areas offer a self-help approach to revitalizing business districts. Involvement with a BIA generally entails a substantial commitment of time and financial resources. However, past experience suggests that a committed membership generally leads to a successful BIA.

History

The concept of Business Improvement Areas (BIAs) originated in 1970. A group of business people in the Bloor-Jane area of west Toronto were concerned about the erosion of their marketplace caused by the growing popularity of shopping malls, plus an extended subway system, both of which were drawing shoppers away from their traditional shopping areas.

Under the Provincial legislation (Section 217 of the Municipal act, RSO 1980, suspended by section 220, RSO 1990) the originators created a self-help program. The legislation empowered the BIA members to use their own money to promote their BIA and to make physical improvements to their area in order to attract more customers. This not only benefited the local businesses, but also the entire neighbourhood.

The success of the first BIA, Bloor West Village, ensured that other retail districts followed this model and became BIAs themselves; for example, Bloor-Yorkville BIA and Kingsway BIA …etc. Today, there are 69 BIAs in the City of Toronto. The BIA concept is emulated throughout Canada, the United States and other countries.

As the number of BIAs in Toronto continued to grow, it became apparent that a formalized organization was required to provide an ongoing means of collecting and exchanging essential information and, importantly, addressing issues and concerns.

In 1980, a constitution was drawn up and a formal association was established, namely, the Toronto Association of Business Improvement Areas (TABIA).

TABIA has developed into a well-respected organization, recognized by all levels of government and the commercial sector. TABIA’s involvement goes well beyond the promotion of BIAs. TABIA has been called upon to work together with Provincial and City Government on legislation pertaining to small businesses.

The various levels of government recognize that BIAs are the main life-line of the communities. Since the inception of BIAs, the City of Toronto has been supportive, and has championed the BIA movement. A special BIA office was established at City Hall, to administer, assist and support the efforts of the City’s BIAs and TABIA.

The Toronto Association of Business Improvement Areas (TABIA)

www.toronto-bia.com

The Toronto Association of Business Improvement Areas (TABIA) is a non-profit umbrella organization working with the over 68 Business Improvement Areas within the City of Toronto who in turn represent more than 27,000 business and property owners.

TABIA’s Objectives

• To promote strong, successful and effective BIAs in the City of Toronto.
• To encourage joint initiatives and collaboration that are mutually beneficial to groups within the BIA on issues and projects, including studies and research in marketing.
• To encourage and facilitate the exchange of information, experiences and ideas among BIAs through such means as our website, newsletters, seminars, workshops for the benefit of the BIA and their individual members.
• To assist BIA’s in pooling their resources to achieve the maximum benefit possible.
• To provide advocacy, to influence policies affecting BIAs, and to obtain support funds and services for BIAs from all levels of government, institutions, agencies and other organizations.
• To protect the interest of BIAs in government tourism policies and in the implementation of those policies

The Ontario Business Improvement Area Association (OBIAA)

www.obiaa.com

OBIAA, through membership, represents, supports and encourages business improvement areas to increase their effectiveness and their contribution to the economic, cultural and social well-being of communities in Ontario.

During the nine years that OBIAA has been constituted, its volunteer board of directors from across the province has worked collectively to assist the members in becoming stronger, as the organization itself works to mature and become more representative of the BIA movement in Ontario.

• http://www.ic.gc.ca/eic/site/sbrp-rppe.nsf/eng/rd02601.html
• www.411.ca
• www.ic.gc.ca/