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Entrepreneurship plays a key role in creating jobs, encouraging innovation, and strengthening Canada’s economy and embracing it ensures this country remains competitive in a rapidly changing global economy. 

By creating a stronger environment for entrepreneurship, Canada can support growth while giving individuals more opportunities to turn their ideas into successful businesses. However, while a strong entrepreneurial culture already flourishes here, there remains various economic and structural challenges making it difficult for people to start or grow their businesses.

Among the biggest challenge is rising costs since inflation, transportation, insurance, supplies, and other operating expenses have put significant pressure on small businesses. According to Statistics Canada, among businesses with 1–19 employees, 48.7% expected rising inflation to be an obstacle in the second quarter of 2026, while 27.1% expected rising input costs and 26.0% expected transportation costs to be challenges.

“It’s always about money. From a business standpoint, it is cash flow considerations/ constraints,” says Naudia Banton, Manager of the Waterloo Region Small Business Centre, one of 54 Ontario Small Business Advisory Centres provincewide funded in by part by Ontario’s Ministry of Economic Development Job Creation and Trade to provide free guidance and resources, networking opportunities, referrals, and programming to support local entrepreneurs. 

Financing remains a hurdle

Having such support can help entrepreneurs not only start but also expand businesses, which means they often need employees, suppliers, and professional services. This creates employment opportunities in local communities and contributes to stronger regional economies leading to the reduction of unemployment while providing people with new career opportunities.

But when it comes to ‘scaling up’ access to financing remains a major hurdle for businesses since higher borrowing costs can make it difficult for entrepreneurs to obtain loans for equipment, property, inventory, or expansion. As a result, many business owners opt to remain small rather than taking the financial risk of growing. 

Couple that with the ongoing trade war with the U.S., and Naudia says she is seeing entrepreneurs visiting the centre who are concerned and seeking advice, which could often result in the formulation of an alternative business model to reflect the current economic conditions.

“Ultimately they’re in business to make money,” she says. “And if they’re going to start losing money by selling to the U.S., then it’s prudent to start selling to different markets.”

Running a sustainable business during this time of economic turmoil says Naudia may require SMEs to operate outside their comfort zone, especially if they start conducting business with clients in other countries other than the U.S.

Many local resources available

“It can be scary because they’re dealing with the unknown, and people can be nervous about uncertainty,” she says.

However, when it comes to finding assistance in Waterloo Region for SMEs there are many resources they can utilize. 

“Whether it’s the business centres or the Chamber of Commerce, there are no shortage of people that will help entrepreneurs,” says Naudia, adding having that ‘sounding board’ can be vital for small businesses. “Sometimes we end up meeting with people multiple times through our advisory services but that’s what we are here for.”

Despite any uncertainties, she always remains optimistic when approached by entrepreneurs looking to start or scale up a business.

“We’re always their supporter,” says Naudia. “That’s why I love my job. There are very few times that I have someone sitting in front of me and question why they’re doing what they’re doing, without suggesting available supports for them.”

Challenges entrepreneurs continue to face:

Rising business cost: When expenses rise faster than sales, entrepreneurs have less money available for expansion, technology, marketing, or hiring.

Access to financing: The Bank of Canada reported in 2026 that lending conditions were somewhat tighter for small businesses than for larger borrowers. 

Taxes and regulatory requirements: For an entrepreneur already managing sales, employees, finances, and customers, additional administrative responsibilities can reduce the time available to focus on growth.

Access to skilled workers:  A small company may struggle to compete with larger employers that can offer higher salaries, stronger benefits, or clearer career opportunities. Without enough skilled employees, owners may be unable to accept new customers or increase production.

Weak or uncertain demand can discourage expansion: Entrepreneurs may hesitate to invest in additional employees, equipment, or locations if they are uncertain whether customers will spend enough to justify the investment.

Economic and international uncertainty: Canadian businesses have faced uncertainty surrounding trade relations, tariffs, economic growth, and changing costs

How Canada can encourage entrepreneurship 

Simplify processes:  Governments can simplify regulations and improve online services and make regulations easier for entrepreneurs to understand while maintaining important protections for workers, consumers, and the environment.

Improve access to financing: Governments and financial institutions can support entrepreneurs through loans, grants, investment programs, and programs specifically designed for new and small businesses. Access to capital is particularly important for entrepreneurs who may have difficulty obtaining traditional financing.

Invest in entrepreneurship education and training: Schools, colleges, and universities can teach students about business planning, financial management, marketing, technology, and leadership. Mentorship programs can also connect inexperienced entrepreneurs with people who have already built businesses. This can help new entrepreneurs avoid common mistakes and develop practical skills.

Promote inclusive entrepreneurship: Women, Indigenous entrepreneurs, newcomers, young people, and entrepreneurs in rural communities may face different barriers to starting businesses. Targeted training, financing, mentorship, and networking opportunities can help reduce these barriers.