Employers struggling to keep up with rising costs, shifting markets, and policy shock, says expert
Confidence among Canadian small business owners has dropped significantly amid rising costs, according to a recent report.
Specifically, only 58% of these employers are expressing optimism for the rest of 2025, according to the latest Small Business Confidence Index from Zensurance.
The report shows a 10-point decline in confidence compared to 2024, when nearly 70% of respondents felt positive about the year ahead.
This comes as 62% of small business owners say the current state of the economy is negatively impacting their operations, citing increased costs and weaker demand as primary concerns.
“This year’s index sends a clear warning: Canadian small business confidence is eroding,” says Danish Yusuf, CEO and founder of Zensurance. “Entrepreneurs are telling us they’re struggling to keep up with rising costs, shifting markets, and policy shocks – all while trying to stay afloat in a tougher-than-ever economy.”
Previously, Canadian businesses showed cautious optimism about both their current position and the future, according to CIBC.
Operational challenges
Rising operational costs have become the top challenge for 43.2% of respondents, far surpassing concerns about economic slowdowns (34.5%) and shrinking profit margins (22.4%), according to Zensurance’s survey of 1,000 small business owners, entrepreneurs, and self-employed Canadians across industries.
Despite these pressures, 38.9% of small business owners are actively exploring new markets in an effort to adapt and maintain their businesses.
The survey also found a 24.2% decline in the number of small businesses carrying insurance, suggesting that more owners are making difficult decisions to cut costs, even if it means reducing their protection.
“We’re seeing a growing number of businesses choosing to go without coverage—not because they want to, but because they feel they have no choice,” says Danish Yusuf, CEO and founder of Zensurance. “That leaves them dangerously exposed at a time when the risk of disruption is higher than ever.”
Previously, the Canadian Federation of Independent Business (CFIB) called on governments to address the labour quality and mobility issues that small businesses are currently experiencing.
How do you reduce costs in a business?
Here are some practical ways businesses can cut operational costs, according to Enterprise Nation:
Cut operational expenses by:
- Negotiating with suppliers
- Putting energy-saving measures in place
- Offering hybrid or remote work
Manage supply chain costs effectively by:
- Talking to more than one supplier
- Taking advantage of group or bulk ordering
- Avoiding overstocking
Prepare for future economic challenges by:
- Tracking what’s going on in the market and how consumers are buying
- Building an emergency fund
The tariffs imposed by US President Donald Trump on Canada have brought hardships to many Canadian businesses, according to a previous report.
