Small Businesses Cautiously Optimistic for 2026: Report

Small business long-term confidence started the year just shy of its historical average, sitting at 59.5 in January, finds the latest monthly business barometer by the Canadian Federation of Independent Business (CFIB).

“We live in uncertain times, but small businesses are resilient and adapting to the new reality,” says Simon Gaudreault, CFIB chief economist and vice-president of research.

When asked to describe their 2026 expectations in one word, the most common responses from small firms were ‘growth’ and ‘sales.’ Others included ‘challenging,’ ‘same’ and ‘steady.’

“Canada’s economic situation is far from rosy and many challenges persist, but small firms are entering the new year cautiously optimistic,” says Gaudreault.

Confidence levels across provinces were mixed. Almost all sectors increased their long-term optimism and some are getting closer to or are at their historical average.

Average wage and price plans remained steady in January, at 2.1 per cent and 2.6 per cent, respectively.

More businesses reported struggling with tax and regulatory costs (70 per cent), followed by insurance (69 per cent) and wage costs (62 per cent). A record share of small firms (40 per cent) said capital equipment and technology costs were causing cost constraints.

Weak demand continues to be the top growth limitation for more than half (54 per cent) of small firms. This indicator has been at or near record levels for roughly two years now. Hiring plans turned net positive for the first time since August 2025, with 15 per cent of small businesses looking to hire and 10 per cent planning to lay off staff in the next few months.

“Heading into 2026, small businesses are hopeful, but it’s clear they need a stable environment to turn that optimism into growth,” says CFIB director of economics Andreea Bourgeois. “Creating favourable conditions for business investment will be key to boosting Canada’s productivity and stimulating entrepreneurship.”