Survey: Small Businesses Feel the Squeeze as Economic Pressures Mount

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U.S. tariffs are also adding pressure. The most common issues cited include rising costs (43.2%), economic uncertainty (34.5%), and shrinking profit margins (22.4%). Others report supply chain disruptions (13.9%) and reduced export demand (9%), while nearly a quarter (23.9%) note other challenges.

As economic headwinds persist, many small business owners are bracing for a tough second half of the year.

To manage the hit U.S. tariffs impose – a 35% levy imposed on most Canadian-made products as of August 1 – Canadian small business owners are taking different actions to minimize them, including:

• 38.9% are exploring new markets outside the U.S.
• 22.2% are making adjustments to their investments and operations
• 18.8% are diversifying their supply chains
• 13.5% are stockpiling inventory
• 9.8% are seeking government support
• 5.9% are considering new commercial insurance policies
• 4.6% are adjusting their existing commercial insurance policies
• 30% say they’re taking “other” actions

However, when asked how confident they are that their businesses will be successful this year, most respondents (58.3%) are confident or very confident, while 41.7% are less confident or doubtful that they will be successful this year.

That marks a 16.5% decline in the level of confidence business owners have this year compared to what they told us in our 2024 survey when 69.9% said they were “very confident”. 

The national online survey of 1,000 Canadian small business owners and independent professionals also asked what is the most significant financial issue they’re facing for the latter half of the year:

• 54.3% highlight increasing their prices
• 48% cite inflation
• 27.2% say tariffs
• 20.3% point to the cost of gasoline
• 17.4% say interest rates
• 17.1% say supply chain issues

9.4% say the cost of business insurance

What Canadian Business Owners Think About Business Insurance

When asked about commercial insurance, 62.1% of respondents in our 2025 survey reported not having coverage – a significant increase from 33.6% in 2024. Only 37.9% currently have insurance, compared to 66.4% last year.

This 84.8% year-over-year increase in uninsured businesses raises serious concerns about risk exposure in a volatile economic climate.

Meanwhile, despite an increasingly destructive wildfire season and ongoing climate volatility, most business owners (58.8%) say these events haven’t influenced their insurance or risk planning decisions. Only 8.7% report factoring it into their risk management plans, while 32.5% say such events are not relevant to their businesses.

When we asked business owners who don’t have insurance why they don’t, the reasons these business owners gave were:

• 39.9% don’t think they need it
• 25.4% say it’s too expensive
• 8% say they haven’t thought about it
• 7.3% claim they have no liability risks
• 5.8% say they’re covered by personal insurance (homeowner or private-passenger auto insurance)
• 5.6% say “other”
• 4.4% say getting insurance is a complicated process
• 1.9% don’t trust insurance companies
• 1.6% are concerned an insurance claim they file wouldn’t be covered

The Biggest Liability Risks Facing Small Businesses

However, when we asked what the most significant liability risk facing their business is, a majority of respondents (25.2%) say “non-payment by customers”, followed by the impact of tariffs (19.9%), and 10.1% say another pandemic.

Other concerns include:

• 7.6% say a cyber-attack
• 5.6% say foreign exchange between currencies
• 4.6% point to the threat of theft and vandalism
• 3.5% say a natural disaster
• 3.4% say property damage
• 3.3% worry about injuries to customers
• 2.5% say injuries caused by a product or service
• 1.4% say lawsuits

Another 12.9% say “other”.

Interestingly, in the 2024 Zensurance Small Business Confidence Index survey, most respondents (31.9%) cited a cyber-attack or data breach as their most significant liability risk.

On the topic of the threat of cyber-attacks or data breaches, we also asked business owners in our 2025 survey how prepared they are to deal with a cyber incident:

• 32.6% saying they are “somewhat prepared”
• 22.5% are “not prepared”
• 17.7% say cybersecurity incidents are “not applicable to my business”
• 15.3% are unsure
• 11.9% say they are “very prepared”

Small business owners may be underestimating their cyber risk. Recently published data suggests 86% of Canadian small businesses have experienced a cyber-attack in the last five years.

Looking Ahead: What Plans Do Small Businesses Have in 2025?

Considering the cautious optimism that most Canadian small business owners have of their prospects for success this year, we also asked what their plans are for the latter half of this year.

At the top of the list – 31.2% plan to introduce new products or services. Other business owners’ plans include:

• 19.9% will buy new equipment
• 14.3% will move their businesses to new locations
• 10.6% plan to do renovations to their workspaces
• 10.5% intend to hire more employees
• 7.2% intend to close or sell their businesses
• 4.8% plan to open a new location
• 3.8% will reduce their employee headcount
• 4.3% say “other”

The remaining 32.8% say “none of the above”. 

We also asked respondents what they would do with $10,000 if they won a small business grant:

• 42.7% would buy new equipment or technology
• 28.2% would invest in marketing and advertising
• 27% would use the funds to pay down existing debt
• 21.2% would invest in training and professional development
• 16.3% would do renovations or make improvements to their workplaces
• 9.9% would invest in cybersecurity defences
• 9.5% would buy business insurance
• 8.5% would hire more employees

Another 10.7% said “other”.

4 Reasons Why Small Business Insurance Is Necessary

A comprehensive business insurance policy provides coverage for a broad range of risks to business owners. Here are four reasons why every business owner should invest in protecting their finances with insurance:

1. Coverage for Unexpected Accidents and Lawsuits

An unexpected accident, injury to a third party, lawsuit, or fire that damages your property and inventory is expensive to recover from – far more than the cost of an annual insurance policy.

For example, the cost of defending yourself in a lawsuit initiated by a customer or another party can range from tens of thousands to hundreds of thousands of dollars. Also noteworthy, a separate 2024 Zensurance survey found a combined 96.4% of Canadian consumers say it’s “very important” for small businesses to have insurance.

2. Homeowner and Private-Passenger Car Insurance May Be Insufficient

Homeowner insurance for your dwelling and private passenger auto insurance for your family vehicle are necessary. However, these policies either do not cover business-related liabilities or commercial vehicles, or their coverage limits may be insufficient, potentially leaving you underinsured.

3. Insurance Supports a Business’s Financial Health

No business, profession, or side hustle is risk-free. Insurance serves as the backbone of every business continuity and risk management strategy.

In addition to protecting your finances and assets from damages and losses, it’s required to drive a business vehicle, lease a commercial property, get a loan, and, in many cases, adhere to your industry’s or province’s regulations. 

Of note: The Canada Revenue Agency allows business owners to deduct all ordinary commercial insurance premiums incurred on commercial properties, machinery, and equipment a business uses.

Furthermore, showing your potential customers a certificate of insurance helps build their trust and confidence in your company or service.

4. Insurance Brokers Make Getting Covered Easy and Affordable

A quarter of our 2025 survey respondents who don’t have business insurance said they don’t have it because it’s too expensive, and 4.4% say that getting insured is complicated. These are both excellent reasons to partner with a licensed insurance broker.

A business insurance broker serves as your trusted advisor. They work for you, not an insurance company, and it’s their goal to get the adequate protection you need quickly and easily at the lowest possible cost.

Explore Your Insurance Options: Get a Free Quote

Zensurance is Canada’s leading small business insurance provider, helping over 350,000 small business owners, independent professionals, and entrepreneurs obtain the customised, low-cost business insurance protection they need.

Complete our online application for a free quote in five minutes or less.

Let our knowledgeable team of experienced brokers shop our partner network of over 50 insurers to find the right coverage for your company, answer questions, and issue policy documents and a certificate of insurance in 48 hours or less.

– Reviewed by Brandon Bowie, Senior Broker and Team Lead, Professional Lines, and Andrew J. O’Brien, VP, Legal and General Counsel, Zensurance.