Canadian Small Businesses Say Rising Costs are Making it Harder to Operate, New Powerpay Survey Finds

Nearly three-quarters of SMBs have limited capacity to absorb more financial pressure, yet more than half remain optimistic about the road ahead

Powerpay, the Canadian payroll and human resources (HR) solution by Dayforce, today released results from a survey of Canadian small and medium-sized businesses (SMBs). Survey insights reveal that SMBs are finding ways to keep moving forward despite sustained economic pressures, with many running out of financial room to manoeuvre. 

According to the findings, nearly three-quarters (74%) of SMBs have little or only some capacity to absorb additional financial pressure before being forced to make significant operational changes. In response to current economic conditions, SMB owners are adapting by raising prices, absorbing costs personally, cutting expenses, or delaying salary increases and hiring – yet nearly half remain optimistic about their own business outlook over the next 12 months. 

Harder to operate a small business in Canada

The survey finds that 64% of respondents say it is now somewhat or much harder to operate a small business in Canada compared to 12 months ago, with only 4% reporting it has gotten easier. Despite this, almost one quarter (24%) report their financial health has improved rather than declined (22%) over the same period, and 42% expect revenue growth over the next 12 months.

Other key findings include:

• Squeezed but adapting: To manage economic conditions, small businesses say they have resorted to a combination of actions, and most commonly have raised prices (48%), cut expenses (39%), delayed hiring (28%), and delayed salary increases (23%)..

• Employees are the top priority if economic conditions improve: Nearly 40% plan to prioritize investing in employees if the economy improves – 21% by hiring more staff and 17% by increasing pay.

• Operating costs top the list of concerns: Operating costs and inflation are the single biggest concern for 40% of business owners, followed by difficulty finding the right talent (19%) and the impact of U.S. tariffs (16%).

• Personal toll on owners: Almost one-third say they are working longer hours (32%) or have taken on responsibilities previously handled by employees or contractors (32%); more than a quarter (28%) report increased stress about their business’s future; and 16% say they’re paying themselves less.

• Optimism persists: Despite the headwinds, many respondents describe themselves as optimistic (40%) or very optimistic (8%) about their business’s outlook over the next 12 months, citing resilience and preparedness as the top driver of that confidence.

• Hard to find the right talent: More than half (58%) say their local hiring market is tight, making it difficult to find the right talent. On the flip side, almost one-third (32%) say they are not hiring, while 10% say they have a surplus of available workers.

• AI adoption is gradual: While 38% of businesses don’t currently use AI, those that do are primarily applying it to administrative tasks (46%) and marketing/content (20%), with time savings on administrative work the most cited benefit.

“Canadian small businesses have always been remarkably resilient, and these findings show that resilience in action. Business owners are making tough decisions – such as managing costs more closely, delaying hiring and salary increases, and in many cases taking on more themselves – to keep their businesses moving forward,” said Behrad Bayanpour, General Manager of Powerpay. “But resilience shouldn’t be mistaken for unlimited capacity. Many businesses are telling us they don’t have much room left to absorb additional financial pressure, yet remain optimistic and are ready to invest in their people and growth when conditions allow.” 

When asked to reflect on the broader picture of running a small business in Canada, 55% of respondents say the challenges they face today are nothing new, as economic hardship has always been part of the equation. However, just under a third (32%) say they didn’t expect it to be this difficult to succeed.

About the Survey

The Powerpay Small Business Survey was conducted among 356 Canadian small and medium-sized business owners and operators who are Powerpay customers, with each respondent representing a separate company. Data was collected in September 2026 and explored business confidence, economic pressures, hiring and workforce trends, technology adoption, and the outlook for Canadian small businesses.

About Powerpay

Powerpay is a Canadian payroll and HR solution purpose-built for small and mid-sized businesses. As part of Dayforce, Inc., Powerpay is trusted by more than 46,000 businesses across Canada to help business owners, accountants, and payroll administrators simplify payroll and people management in one system. With 25 years of experience serving Canadian businesses, Powerpay continues to invest in technology designed to make managing and paying people simpler. Powerpay is payroll, done right. 

Source : Powerpay