A Big Economy through Small Business – Examining Micro-Enterprises in Toronto
15 February 2021
Small business is the economic engine and job creator of any region. Toronto is no exception. The pandemic inordinately impacted small businesses, particularly those in the hospitality, tourism, and retail sectors. However, the proven tenacity of small business, coupled with the right kind of support from government and community, suggests that these firms can be the economic driving force of recovery going forward.
While some people may believe that medium and large enterprises make up the majority of businesses in Ontario, it’s actually micro-enterprises that do. A micro-enterprise is a firm that employs four or fewer individuals and is a statistical sub-section of small businesses. In 2020, there were 283,205 micro-enterprises in Ontario that employed close to 315,000 individuals. In Toronto, 140,028 micro-enterprises employed 154,031 individuals. According to Industry Canada, in 2019, micro-enterprises make up 53.8% of all Canadian businesses. By adding those businesses with 5−9 employees, this number increases to 73.4%. In other words, almost three out of four Canadian businesses have 1−9 employees.
Over the course of the pandemic, changing restrictions and increasing levels of uncertainty have forced some small business owners to entirely pivot their business offerings, and Statistics Canada estimates that over 14,700 businesses in Ontario closed in December 2020 (Statistics Canada). Many businesses of all sizes have been hit hard by the effects of the pandemic. Since micro-enterprises employ a significant proportion of the Canadian workforce, their role in recovery will be paramount. While there have been federal and provincial support programs to mitigate the financial burden businesses have faced over the past year, governments will need to ensure they are supporting micro-enterprises and small businesses equitably compared to medium and large enterprises. Indeed, there is some evidence to suggest that the frameworks of most government workforce development policies and programs are unintentionally biased towards large and medium sized employers. Such businesses have the dedicated HR departments to manage government training initiatives or access wage incentives. Furthermore, while there are many initiatives to support entrepreneurship, we do not have a coherent policy framework or strategies to support micro-enterprises to grow and expand.
Entering into business ownership, or entrepreneurship, is no easy feat. Yet, entrepreneurship can be a way for many people who have been minoritized in society to carve out space for their communities, have ownership in their business activities, and contribute to society in empowering ways. For Indigenous people, black people, people of colour, immigrants, people with disabilities, women, and LGBTQ+ people, entrepreneurship can be a form of economic empowerment. However, there is very limited information on the demographics of business ownership in Ontario, let alone in Toronto. And since micro-enterprises make up the majority of businesses in Ontario, it would be integral to understand the data behind these firms to share lessons learned and ensure future successes for others who may be considering starting their own micro-enterprise.
In 2017, research conducted on small and medium sized enterprises (SMEs) indicated that only 16% of SMEs in Canada were majority women-owned, 12% were owned by visible minorities, and 1% Indigenous-owned. While this data is a useful starting point, it just scratches the surface and doesn’t provide enough detail about the demographics of people participating in micro-enterprise ownership specifically. The lack of data on micro-enterprise ownership in Toronto is a gap that TWIG will aim to address through the following questions: Who are the people that are entering into micro-enterprise ownership? Why are they entering into micro-enterprise ownership? What industry sectors are attracting people into micro-enterprise ownership? How has the pandemic affected the number, growth, and sectoral distribution of micro-enterprises? Finally, how can our workforce development system best support the nurturing and growth of micro-enterprises?
At TWIG, we feel it is critical to understand and to better assist small business and micro-enterprises in particular. We need to better understand the gaps and challenges these businesses face, provide support in ways that matter, and showcase the diversity of micro-enterprise ownership. Micro-enterprises are hyper-local firms; they are dotted along the main streets of our communities; they’re owned by our neighbours, friends, and community members and play a more than essential role in our city’s pandemic recovery and socioeconomic development.