Canadian SMBs warn another major cost increase could force them to shut down

TORONTO (August 18, 2025): Nearly half (42%) of Canadian small and medium-sized businesses (SMBs) are warning that another major cost increase could force them to shut down. Over half say today’s economic climate is the most unpredictable in the last decade, more so than during the peak of the Covid-19 pandemic, according to new research from Dext.

The findings, detailed in Built for Bigger Things - a nationwide study of 500 SMB leaders across sectors, regions, age, size and revenue bands, paint a sobering picture of ongoing instability choking off growth, crippling ambition and clouding strategic vision across Canada’s entrepreneurial base.

A year marked by rising costs, U.S.-Canada trade uncertainty, and changing consumer behaviour has left nearly a quarter (24%) cancelling or delaying growth plans. The same number report that cash flow struggles have forced hiring freezes or even staff reductions. For half of all respondents, long-term planning has become virtually impossible.

“We’re beyond resilience now, many small businesses are simply worn down,” said Sabby Gill, CEO at Dext. “This research shows that the entrepreneurs who power Canada’s economy are no longer just navigating uncertainty; they’re being paralyzed by it. Without meaningful support, we risk losing a generation of business owners, not just to economic pressures, but to exhaustion and burnout.”

Admin burden and poor planning stalling growth ambition 

While macroeconomic pressures dominate headlines, the research shows that internal inefficiencies are compounding the crisis. Many SMBs are still running their finances with outdated tools, overstretched leaders and little strategic planning, undermining their ability to respond with agility.

Nearly one in five business owners (18%) spend between 21-40+ hours a month on financial admin - the equivalent of nearly a full working week lost to non-revenue generating tasks. Over half (54%) describe this work as “a necessary evil” and more than a third (35%) say it drains their energy for strategic thinking and innovation. Alarmingly, 37 per cent say this ongoing battle has made them lose sight of why they started their business in the first place. 

What’s more, it’s holding back growth. Over a third (35%) spend more time stuck in the books than growing their business, nearly the same amount (35%) have actually missed business opportunities due to being tied up in admin, while almost half (45%) believe they’d be better leaders if they could escape the finance admin burden. 

This drag effect is made worse by the fact that most small businesses are still operating without a robust financial strategy. Fewer than one in five are conducting scenario modelling (18%) or regularly revisiting financial decisions based on new information (25%), and less than a quarter (23%) are reviewing performance monthly or quarterly using data. So leaders are not only buried in the numbers, they’re flying blind.

Yet few are set up to break the cycle. On average, 29 per cent of Canadian SMB financial management is manual, while just a third use any form of software to automate the admin. And though many have in-house or external financial support, more than a third (35%) are still doing it alone or leaning on informal help from friends or family (13%).

“Canada’s small businesses are being hit from both sides, external pressures and internal inefficiencies,” Gill added. “It’s not just the economy holding them back, it’s the lost hours, limited visibility, and lack of real-time insights. We need to give business owners better tools and better systems so they can get back to leading, not just surviving.”

A generational dive in confidence and preparedness

Young entrepreneurs are leading a shift toward tech-enabled, agile business practices and leveraging AI tools where possible. Forty-one per cent of 18-34 year-olds use bookkeeping software to automate admin, compared to just 30 per cent of those aged 55 and over. Young business owners are also more likely to lean on flexible support like fractional finance directors compared to their older counterparts. 

This tech-forward mindset extends to broader business confidence. A third of business owners under 35 feel very confident managing currency fluctuations between CAD and USD, while just 20 per cent of those 35 and over feel very confident. When it comes to supply chain disruptions, confidence drops from 30 per cent among young business owners to just 11 per cent of the oldest group. 

Young entrepreneurs appear more proactive and attuned to the evolving realities of international trade and regulation, while older peers may be more vulnerable to volatility. The divide deepens in the face of a prolonged global trade war with the U.S.. One in five entrepreneurs under 35 report feeling very confident and well prepared, whereas only one in 10 of those 55+ say the same. 

“We often call SMBs the lifeblood of the economy, but right now many are bleeding time, energy, and belief,” said Sabby Gill. “Younger leaders are showing us what’s possible with the right tools and mindset. The challenge is ensuring every business, no matter its age or stage, has the support it needs to navigate what’s next and reclaim its ambition.”

###  

NOTES TO EDITORS 

Media contacts

Sofia Cabrera, Senior PR & Communications Manager

sofia-louise.cabrera@dext.com 

Linda North, North PR 

linda@northpr.ca

About the data

The Built for Bigger Things quantitative research study was commissioned by Dext and conducted by Censuswide. It surveyed 500 senior decision-makers at Canadian small and medium-sized businesses (1-249 employees) across a range of industries. Fieldwork took place over a two-week period in June 2025.

About Dext 

Dext, part of the IRIS Software Group, is the leading provider of AI-powered bookkeeping automation. Founded in 2010, the company empowers businesses, accountants, and bookkeepers to thrive through cutting-edge artificial intelligence and machine learning technology that simplifies accounting processes and enables smarter, more timely financial decisions. 

Trusted by thousands of professionals worldwide, Dext integrates with major accounting software and connects to over 11,500 banks, suppliers, and marketplaces.

In 2024, Dext joined IRIS Software Group and continues to work directly with its clients to create a more seamless, end-to-end accountancy workflow. For more information, visit www.dext.com.