Behrad Bayanpour, General Manager of Powerpay, presents at Powerday 2026
Canadian small and medium-sized businesses are facing mounting cost pressures, tight hiring conditions and limited financial flexibility, but many business owners remain optimistic about the year ahead, according to a new survey from Powerpay, the Canadian payroll and HR platform owned by Dayforce. The survey found that 64% of respondents believe it has become somewhat or much harder to operate a small business in Canada compared with 12 months ago, while only 4% said conditions have improved.
Perhaps more concerning for small businesses is how little room many have left to absorb further financial pressure. Nearly three-quarters, or 74%, said they have little or only some capacity to take on additional financial pressure before significant operational changes would be required. Business owners are already responding in a number of ways. Nearly half, 48%, said they have raised prices, while 39% have cut expenses. Another 28% have delayed hiring and 23% have postponed salary increases.
The financial pressure is also increasingly falling directly on business owners. About 32% said they are working longer hours, while the same percentage have taken on responsibilities previously handled by employees or contractors. Another 28% reported increased stress about the future of their business, and 16% said they are paying themselves less.
“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.”
Operating costs and inflation remain the largest concern among respondents, cited by 40% of business owners. Finding the right talent ranked second at 19%, followed by the impact of U.S. tariffs at 16%.
Hiring conditions remain challenging for many businesses. About 58% of respondents described their local hiring market as tight and said finding the right talent is difficult. At the same time, 32% said they are not currently hiring, while 10% reported having a surplus of available workers.
If economic conditions improve, employees could be among the biggest beneficiaries. About 21% of respondents said they would prioritize hiring additional staff, while 17% would increase employee compensation.
The survey also provides a snapshot of how Canadian SMBs are approaching artificial intelligence. Adoption remains gradual, with 38% of businesses reporting that they do not currently use AI. Among businesses that are using the technology, administrative work is the leading use case at 46%, followed by marketing and content at 20%. Saving time on administrative work was the most commonly cited benefit.
Despite the economic pressure, the outlook is not uniformly negative. About 24% of respondents said their financial health has improved over the past year, compared with 22% who said it has declined. Another 42% expect their revenue to grow during the next 12 months. Overall, 40% described themselves as optimistic about their business outlook over the next year, with another 8% saying they are very optimistic. Resilience and preparedness were cited as the leading reasons behind that confidence.
The findings also point to a divide in how entrepreneurs view the current environment. While 55% said today’s challenges are nothing new and that economic hardship has always been part of running a business, 32% said they did not expect succeeding in business to be this difficult.
The survey comes as Powerpay marks 25 years of serving Canadian small and mid-sized businesses. The company recently brought together its community for Powerday 2026, a full-day event featuring conversations on the Canadian economy, business operations, technology and the challenges facing employers. The event included an economic panel featuring Andrew Kelvin, CFA, Head of Canadian and Global Rates Strategy at TD Securities; Maral Gholami, Head of Analytics at Ownr at RBCx; and Dharmesh Gandhi, Partner, SR&ED, Incentives and Capital Investments at EY Canada.
The discussion provided a broader look at the economic environment facing Canadian businesses and the outlook ahead. Powerday also featured a customer panel with Erin Arsenault, CHRL, Director, People & Operations at Special Olympics Ontario, and Daniel Haworth, Chief Financial Officer at Gee Beauty, bringing an operator perspective to the conversation around managing people and businesses in the current environment.
The Powerpay Small Business Survey was conducted in September 2026 among 356 Canadian small and medium-sized business owners and operators who are Powerpay customers, with each respondent representing a separate company. The survey examined business confidence, economic pressures, hiring and workforce trends, technology adoption and the outlook for Canadian small businesses.
