Small businesses weathered recession better than large firms: Report

Employment fell 4.2 per cent compared to 5.5 per cent
||Last Updated: 02/01/2011

Canadian small and medium-sized businesses (SMEs) weathered the recession well compared to large firms in the private sector, according to a report by RBC Economics. Overall, employment at private SMEs fell 4.2 per cent during the recession, in contrast to 5.5 per cent among larger private firms.

"Countering concerns that smaller enterprises are generally more impacted by economic downturns, we found that smaller businesses endured the recent recession better than their larger counterparts," said Paul Ferley, assistant chief economist at RBC. "The relative success of private sector SMEs likely reflected lower exposure to external markets such as the United States, which saw greater weakness compared to Canada's domestic economy."

Private SMEs in Canada with fewer than 300 employees were better able to cope with the effects of the recession and have been quicker to recover than larger private enterprises, found RBC. In addition, businesses that depend on the U.S. export market had a more difficult time than those more focused on the domestic market, which was not hit as hard by the recession.