Canada’s small-business landscape in 2025 rewards a mix of market access, affordability, talent, and local supports. Choose a city that matches your industry, growth plan, and cost tolerance. Below are seven top picks, why they matter, and practical next steps.
Why location still matters in 2025
Small businesses succeed when three forces align: customers, cost, and capability. Cities that combine a reachable customer base, manageable overheads (rent, wages, taxes), and reliable local talent and supports (incubators, grants, banks) give founders the highest chance of early traction. In 2025, venture capital and commercial real-estate trends also shape where startups and small firms cluster. The Business Development Bank of Canada’s 2024–25 analysis shows uneven VC flows and sectoral differences that matter for scaling ventures.
1) Toronto
Why it’s good: Toronto is Canada’s largest consumer market and finance hub. You get immediate access to millions of customers, deep talent pools in tech and services, and world-class incubators and accelerators.
Risks: Commercial rents and wages remain high, and competition is intense. Recent ecosystem reports show some downward movement in global rankings, reflecting a tougher VC environment, but the local market still offers unmatched scale.
Practical tip: If you need rapid customer testing, B2B partners, or financial services, start in a Toronto neighbourhood with lower rent (e.g., east-end industrial zones) and use co-working/incubator programs to reduce fixed costs.
2) Montreal
Why it’s good: Montreal pairs affordability with a large bilingual talent pool, especially in creative, AI, and software roles. Recent coverage highlights Montreal’s strong quality-of-life and cost metrics compared with other global cities, making recruitment and retention easier.
Risks: Language requirements (French) can be a barrier in some sectors. However, bilingual teams are an asset for North American and European market access.
Practical tip: Tap provincial supports for R&D and bilingual hiring incentives. Consider incubators in Mile-End and downtown to connect with designers, developers, and creative agencies.
3) Vancouver
Why it’s good: Vancouver offers proximity to major US west-coast markets, a strong startup cluster, and a healthy quality of life that attracts talent. It scores highly on startup indexes and remains a go-to for companies building cross-border partnerships.
Risks: Housing and office costs can be steep in core areas. Plan for remote-friendly hiring or satellite offices outside the downtown core.
Practical tip: Look for industrial/light commercial zones in suburbs for lower rent and access to logistics, or leverage co-ops and shared kitchens if you’re in food or retail.
4) Calgary
Why it’s good: Calgary has become more diversified since the oil-price shocks, offering lower commercial rents and proactive municipal incentives to attract small business and tech. A steadier real-estate outlook for 2025 improves cost predictability for new ventures.
Risks: Consumer market size is smaller than Toronto or Vancouver. But if you need affordable space, local supply chain access, or energy-adjacent opportunities, Calgary shines.
Practical tip: Negotiate multi-year lease terms with landlords and explore provincial grants targeting SMEs and clean-tech firms.
5) Waterloo-Kitchener
Why it’s good: The Waterloo region is Canada’s deep-tech engine. If your business relies on AI, hardware, or engineering talent, the local university-industry pipeline, plus a dense cluster of startups and manufacturing partners, is invaluable.
Risks: Local market is smaller; many companies here aim to scale nationally or sell B2B. Expect tight competition for specialized hires.
Practical tip: Partner with university commercialization offices for talent and R&D credits. Consider shared lab or maker spaces to lower initial capital costs.
6) Ottawa
Why it’s good: Ottawa’s strength is stable demand from federal procurement and a concentrated cybersecurity and public-sector tech talent base. For firms that sell to government or need security-cleared talent, Ottawa provides a steady route to early revenues.
Risks: Growth can be tied to public budgets. Diversify clients beyond government to smooth revenue cycles.
Practical tip: Use procurement readiness programs and local consultancies to navigate RFPs and compliance.
7) Halifax (and Halifax Regional Municipality)
Why it’s good: Atlantic Canada’s largest city gives lower rents, improving margins for service and consumer businesses. Halifax has been investing in startup supports and offers gateways to both local markets and the broader Atlantic region. It’s an appealing option for founders who value lower burn and a strong community vibe.
Risks: Smaller talent pool; scaling nationally may require a satellite office or remote hires.
Practical tip: Leverage provincial grants for SMBs and digital adoption programs to accelerate customer reach beyond Nova Scotia.
Other cities worth considering
Edmonton — improving startup supports and lower costs.
Kelowna — strong lifestyle draw and growing remote-first tech scene.
Winnipeg and St. John’s — for hyper-affordable rents and niche local markets.
How to choose: a short checklist
Customer proximity: Where are your first 1,000 customers?
Costs: Compare commercial rent, wages, and local taxes. Use CBRE/municipal data for benchmarks.
Talent: Is the required workforce local or remote-hireable?
Support: Are incubators, grants, and procurement channels available? (BDC, provincial SME programs).
Scalability: Can you access VC, mentors, or networks if you want to scale fast? Look at regional VC flows.
Funding, permits and practical first 90 days
Register your business with provincial registry and get the right tax accounts.
Apply for local small-business grants (municipal/provincial) and BDC financing if scaling.
Secure a flexible workspace or short-term lease to test the market.
Build a minimum viable offering and validate with local customers within 90 days.
Final verdict
No single “best” city fits every small business. For maximal market reach and talent, pick Toronto or Vancouver. For lower costs with good talent, choose Montreal or Calgary. For deep-tech ties pick Waterloo, for government work pick Ottawa, and for affordability and east-coast opportunity pick Halifax. Use the checklist above to match city strengths to your business needs.
