The State of Canadian Entrepreneurship 2025: What SMEs Need to Know (and How to Build a Stronger Growth Strategy)
Insights for growing Canadian SMEs, based on the BDC State of Entrepreneurship Report 2025 (Download full report below)
Canadian small and mid-sized businesses are entering 2025 with a mix of caution, resilience, and unprecedented opportunity. According to the latest BDC State of Entrepreneurship Report, Canadian entrepreneurs remain remarkably committed—92% would choose entrepreneurship again—but they’re also facing new pressures: rising costs, persistent uncertainty, shifting trade dynamics, and the demand for faster digital transformation. bdc-state-entrepreneurship-repo…
At Lead Prospect, we work with founders and SMB leaders across Canada every day. The trends highlighted in this report echo what we see on the ground: the most successful SMEs are not necessarily the biggest—they’re simply the ones who adapt fastest.
Below is a breakdown of the most important insights from the BDC report and what they mean for Canadian SMEs looking to grow sustainably in 2025 and beyond.
What is in store for SMEs? Learn more in the BDC Report
Productivity Is Now a Survival Imperative—Not a Nice-to-Have
The report shows a clear shift: 74% of SMEs implemented productivity-boosting measures in the past year, including:
30% adopting new technologies
24% optimizing internal processes
22% investing in training
20% automating tasks bdc-state-entrepreneurship-repo…
This is one of the most important findings for Canadian business leaders: your competitor isn’t your neighbour—it’s the company that adopted technology before you did.
What this means for SMEs
To stay competitive during a slowdown, SMEs need:
Streamlined processes and SOPs
Clear data visibility (dashboards, KPIs)
Automation to reduce manual tasks
AI-assisted tools that actually reduce costs
This aligns perfectly with what we see at Lead Prospect: businesses that modernize early experience stronger margins, better customer retention, and higher resilience—even in uncertain markets.
Profitability Is the #1 Priority for 2025
40% of SMEs are prioritizing profitability this year, even ahead of growth initiatives. They’re focusing on:
Customer retention (28%)
Cost reduction (25%)
Strengthening profit margins bdc-state-entrepreneurship-repo…
It’s a shift from “grow at all costs” to “grow efficiently.”
What this means for SMEs
If your business is feeling pressure, you’re not alone—41% of business owners report being dissatisfied with current profitability. This means smart strategy, better segmentation, and clear financial planning will matter more than ever.
For growth-minded SMEs, profitability-focused planning should include:
Reviewing customer segments for high-value opportunities
Implementing pricing strategies that reflect real costs
Reducing dependency on a single market
Evaluating ROI on marketing, tools, and headcount
Trade Pressure & Inflation Are Reshaping Buyer Behaviour
Inflation remains the top challenge for 31% of SMEs, with rising costs hitting certain industries especially hard—manufacturing, construction, food services. Meanwhile, 26% of entrepreneurs report weaker demand, reflecting cautious consumer spending and tariff-driven trade uncertainty. bdc-state-entrepreneurship-repo…
What this means for SMEs
The smartest companies are:
Diversifying suppliers and markets
Increasing pricing transparency
Communicating openly with customers
Reallocating resources to more stable or local segments
The report highlights multiple case studies showing that businesses that adapted quickly—shifting suppliers, rebalancing pricing, or entering new Canadian provinces—were able to minimize damage and even grow.
AI Adoption Is a Competitive Advantage, Not a Trend
The report reveals a major milestone: 50% of Canadian SMEs now use AI in their business, especially for:
Marketing
Inventory forecasting
Customer service
Financial automation
Recommendations & personalization bdc-state-entrepreneurship-repo…
AI adoption is also directly tied to stronger profitability.
72% of AI-using SMEs were profitable,
compared to62% of businesses not yet using AI. bdc-state-entrepreneurship-repo…
What this means for SMEs
AI doesn’t replace jobs—it reduces low-value tasks so humans can focus on high-value work. The fastest-growing SMEs are using AI to:
Write better sales emails
Automate customer support
Improve forecasting accuracy
Reduce operational errors
Personalize marketing at scale
At Lead Prospect, we help SMEs integrate AI in practical, revenue-driving ways—not hype, not complexity, just better results.
Canadian Entrepreneurs Are Resilient—But Burnout Is Real
Despite everything, 86% of business owners say they’re in good physical health, but 54% reported emotional or mental exhaustion. bdc-state-entrepreneurship-repo…
Entrepreneurship offers big advantages—control, flexibility, passion—but also major downsides:
42% cite higher stress levels
36% work longer hours
29% report unstable income bdc-state-entrepreneurship-repo…
What this means for SMEs
More Canadian owners are actively investing in:
Leadership development
Training
Mental health and delegation
Stronger systems to reduce founder dependency
One of the most significant findings:
40% of entrepreneurs took a training or development course in 2024, with younger entrepreneurs leading the trend. bdc-state-entrepreneurship-repo…
This tells us that high-performing SMEs are moving away from instinct-based leadership to skills-based operational discipline.
A Shift Toward Local Growth—Not Cross-Canada Expansion
The report shows that most SMEs are focusing on growth close to home, with:
22% planning to acquire more customers in their own province
Only 7% planning interprovincial expansion
10% interested in international markets bdc-state-entrepreneurship-repo…
What this means for SMEs
Local-first strategies are becoming stronger due to:
Trade uncertainty
Higher transport and logistics costs
The “Buy Canadian” movement
Greater competition for national buyers
Companies that re-optimize for local or regional growth are outperforming those trying to expand too broadly during economic turbulence.
Entrepreneurship Remains a Strong Personal Choice
Despite the pressures, 92% of entrepreneurs would start again. Even among those who experienced financial losses, 63% would still choose entrepreneurship. bdc-state-entrepreneurship-repo…
What this means for SMEs
Canadian business owners are optimistic by nature, but success in the next decade won’t come from grit alone. It will come from structure, strategic clarity, and adopting the tools and processes that allow companies to scale sustainably.
What SMEs Can Do Next: Lead Prospect’s Recommendations
Based on the BDC findings and our own work with SMEs across Canada, here are the top priorities for 2025:
1. Modernize your operations before scaling
Process documentation, automation, KPI dashboards, and centralized systems reduce cost and burnout.
2. Adopt AI technologies that drive measurable ROI
Start small: forecasting, customer service, marketing, sales automation.
3. Improve profitability through smarter segmentation
Identify your highest-margin customers and double down.
4. Strengthen resilience through diversification
Suppliers, markets, channels, pricing strategies.
5. Build a leadership team—not a founder-dependent business
Delegation, training, and operational structure matter more than hustle.
Final Thought: Canadian SMEs Are Entering a New Era of Growth
The BDC State of Entrepreneurship Report proves one thing clearly:
Canadian SMEs are resilient, adaptable, and ready to evolve.
The businesses that will win in the next five years are those that:
Embrace digital transformation
Build strong, efficient internal systems
Focus on profitability
Adopt AI early
Maintain a clear, strategic growth roadmap
If your business is ready to reach its next stage of growth, Lead Prospect is here to help. Contact us for a free evaluation.