Imagine this: you've poured your heart and soul into launching your dream business. You've got the passion, the drive, and a killer product. But there's one crucial ingredient that could make or break your success—financial literacy.

It's not the most glamorous aspect of entrepreneurship, but understanding the numbers is essential for making smart decisions, securing funding, and ultimately, achieving your business goals. But here's the kicker—a surprising number of Canadian entrepreneurs are lacking confidence in their financial know-how.

In fact, recent studies reveal that only half of Canadian small business owners felt they had a good grasp of financial management before starting their ventures. Even more concerning? Nearly half of small business owners experience challenges because of a lack of financial knowledge. 

Ready to ditch the uncertainty and take control of your financial future? Dive into these 20 eye-opening statistics about financial literacy in Canada, and discover how you can boost your business acumen and set yourself up for success.

Table of Contents

1. The state of Canadian small business financial literacy

2. Technology and financial literacy

3. Hiring trends and employment growth

4. Financial literacy leads to financial security

5. Increasing reliance on credit to pay for business expenses

6. Economic trends in finance

The state of Canadian small business financial literacy

Canadian small business owners have made strides in improving their financial literacy, but there are still gaps, particularly among women and smaller businesses.

Understanding key financial principles is crucial for long-term success, and many entrepreneurs are stepping up their knowledge to better navigate the complexities of cash flow, taxes, and profitability.

1. Financially literate business owners are more likely to innovate.

Among small business owners confident in their financial literacy, 97% reported creating new business innovations in the past year, compared to 88% of those with lower financial literacy. High financial literacy empowers better business decisions.

2. 69% of Black small business owners felt confident in financial literacy before starting their business.

This leaves a significant 31% who lacked the financial knowledge when they launched their ventures. This gap underscores the importance of financial education and resources for early-stage entrepreneurs.

3. 83% of Canadian entrepreneurs scored well on a financial literacy quiz in 2023.

This is a significant improvement from 2017, where only 78% of business owners could answer seven or more questions correctly. The increase shows a growing awareness and knowledge of financial management among entrepreneurs​.

4. Over 4 out of 5 entrepreneurs (77%) say they enjoy dealing with financial matters.

This increase from 68% in 2017 suggests that Canadian business owners are becoming more comfortable and confident with financial tasks, which can help improve business decision-making and long-term financial health.

Technology and financial literacy

As the business landscape becomes increasingly digital, technology is playing a critical role in improving financial literacy.

Accountants and small business owners alike are leveraging tools like AI, automation, and real-time financial insights to make more informed decisions and better manage financial risks. Firms that adopt technology are better positioned to weather economic challenges and enhance their financial strategies.

5. 90% of Canadian accountants believe that tech-advanced clients are well-positioned.

With economic challenges like interest rates and inflation rising, technology is viewed as essential for maintaining profitability and operational resilience.

6. 99% of Canadian accountants have used AI to help clients.

Real-time insights are now seen as critical to business survival, with companies leveraging technology such as AI to gain an immediate understanding of their financial performance.​

7. Over 80% of Canadian accountants report technology is freeing up time for more advisory work.

By streamlining compliance tasks, technology enables accountants to focus on higher-value advisory services, strengthening client relationships.

8. 29% of Canadian accountants believe that cloud accounting is a game-changer.

Cloud accounting, followed closely by AI and machine learning (28%), are noted by accountants as having the single largest impact on the accounting industry in the last 5 years. 

Hiring trends and employment growth

Hiring trends reflect the broader economic pressures facing Canadian businesses. While financial literacy is improving, talent shortages and the need for more tech-savvy professionals continue to affect growth.

Firms are increasingly using technology to attract and keep top talent, with many businesses expanding their employment capacity because of greater efficiency from tech investments.

9. 82% of Black-owned businesses reported hiring more staff in the past year with Black employees making up 58% of personnel.

Despite broader employment challenges, these businesses are experiencing growth, contributing to overall employment gains in Canada. Black-owned small businesses continue to expand their workforce, contributing to local economies.

10. 26% of Black business owners say it is challenging to find qualified staff.

Although employment at Black-owned small businesses is growing, one of the biggest challenges when it comes to hiring employees is finding people with the right qualifications. 

Financial literacy leads to financial security

Entrepreneurs with higher financial literacy felt more secure about their financial futures. They are more confident in managing business risks, making investments, and taking advantage of growth opportunities.

This section explores how financial literacy directly contributes to the financial stability and security of business owners.

11. 89% of Black small business owners report improved financial security through entrepreneurship.

Black small business owners who are more confident in their financial literacy report increased financial security compared to 59% of those with lower confidence.

12. 55% of diverse owners of businesses say they will take risks regarding their financial investments.

Borrowing money can be a risk, but in Canada, business owners see this as a way to gain leverage and achieve business growth.

13. 41% of Canadian accountants believe that a challenging economy is the number one threat to security in the accounting profession.

Understanding the economic environment through financial literacy can help you prepare for an economic downturn, regardless of the industry you work in.  

Increasing reliance on credit to pay for business expenses

Many small business owners in Canada are increasingly relying on credit to cover essential business expenses. This trend is driven by rising costs and inflation, leaving businesses vulnerable to long-term debt.

Understanding how to effectively manage credit is becoming a crucial aspect of financial literacy.​

14. Canadian small businesses increased their credit card spending by 20% since pre-pandemic levels.

This surge highlights the reliance on credit cards as a source of emergency funding, contributing to financial vulnerability.

15. 55% of business owners rate their firm’s credit record as very good.

This marks a 12% improvement from a financial report conducted by BDC six years ago, showing a positive trend in how businesses are managing.

16. Only 53% of Canadian entrepreneurs have checked their business credit score.

Despite the importance of maintaining a strong credit profile, nearly half of business owners have never asked a credit agency for a business credit report, suggesting room for improvement in credit management practices​.

Economic trends in finance

Canadian small businesses continue to face economic challenges, including inflation, interest rate hikes, and supply chain disruptions. These trends are shaping how businesses approach their financial planning, and many times, are forcing entrepreneurs to enhance their financial literacy to stay competitive and ensure business survival.

17. Due to a 60% increased cost of doing business, Canadian accounting firms are experiencing reduced profitability.

During the current economic landscape, the top challenge facing Canadian accountants in provinces other than Quebec and other small businesses is an increased cost of doing business.

18. 89% of Canadian accounting firms believe technology is the way to survive periods of inflation and high interest rates.

Nearly 9 out of 10 Canadian accountants in provinces other than Quebec agreed businesses can remain competitive and profitable by adopting technology.

19. 1 in 3 Black small business owners significantly contribute to the economy.

Black small business owners contribute to the economy through innovative new products and services. The next most significant contributions include creating jobs, cultural enrichment, and mentoring other Black entrepreneurs.

20. 94% of Black-owned small businesses have created a new innovation in the last 12 months.

Innovative new products and services contribute to the economy in a positive way. Other types of innovations that help improve the economy include new management processes, new technology, and new environmental innovations. 

Empowering your business through financial literacy

Financial literacy remains a cornerstone of business success for Canadian entrepreneurs. Understanding key financial concepts like cash flow, profitability, and credit management is essential for making informed business decisions and navigating economic challenges.

As the landscape continues to evolve with technological advancements, small business owners who invest in both financial literacy and technology will be better equipped to weather economic uncertainties, manage growth, and ensure long-term success. Whether it's leveraging real-time financial insights or mastering debt management, enhancing financial literacy can be the difference between surviving and thriving in today's business world.

By prioritizing financial literacy, you'll not only gain peace of mind, but you'll also empower yourself to make informed choices that will drive your business forward. Ready to take the next step? Explore QuickBooks' suite of tools and resources designed to help Canadian businesses thrive.

References:

1. Black history month survey: Innovation thriving but signs of economic uncertainty
2. Technology is saving time with compliance and elevating strategic business advisory for accounting professionals
3. The financial literacy of Canadian entrepreneurs

*Intuit QuickBooks commissioned an online survey in April 2024 of 993 accounting professionals (all adults aged 18+) throughout Canada (excluding Quebec).

*Intuit QuickBooks commissioned an online survey completed in January 2024 of 1,500 Black small business owners and 1,500 non-Black small business owners (adults aged 18+) throughout Canada.