It has never been easier to start a business.
Not that long ago, entrepreneurship often required significant upfront capital. You might need to lease a storefront or office, buy equipment, carry inventory, hire administrative support and pay to reach customers through traditional advertising channels.
Today, much of that infrastructure has been replaced by software. A business can be registered online. A website can become the storefront. Social media can provide the marketing department. Zoom can replace the meeting room. AI can take notes, transcribe calls, draft content and automate administrative work. E-commerce platforms can process sales, while third-party logistics companies warehouse products, ship orders and manage returns.
For self-employed people and microbusinesses in particular, this transformation has been extraordinary. Technology has allowed one person to operate with capabilities that once required an entire office.
But we have misunderstood what happened.
We did not eliminate the infrastructure required to run a business. We outsourced it, and much of it now sits outside Canada.
That distinction matters.
The typical Canadian small business is increasingly dependent on a collection of software platforms, cloud services, payment processors, marketing tools, e-commerce systems and, increasingly, artificial intelligence products. Together, these form a company’s “tech stack”: the digital infrastructure required to keep the business functioning.
And a significant amount of that infrastructure is controlled by U.S. companies and priced in U.S. dollars.
For Canada’s smallest businesses, that creates a vulnerability we rarely discuss: foreign exchange risk has quietly become a major operating cost.
Your $100 subscription doesn’t actually cost $100
Consider a Canadian consultant paying $100 US per month for a software subscription.
If the exchange rate of the Canadian-dollar to the U.S. dollar moves from $1.35 to $1.40, that $100 US subscription goes from costing C$135 to C$140. The software company has not raised its price. The Canadian business owner has not purchased anything additional.
Yet the expense has increased. Five dollars may not be a crisis. The problem is that few businesses have only one subscription.
There may be website hosting, cloud storage, bookkeeping software, email marketing, graphic design, project management, video conferencing, scheduling, customer relationship management, e-commerce, payment processing, cybersecurity, transcription and now multiple AI tools.
Ten or twenty small foreign-currency expenses can add up to a meaningful operating cost.
And unlike rent or a Canadian-dollar salary, the actual Canadian-dollar cost of those subscriptions can change every month.
This creates a peculiar situation. A business owner can negotiate well, control spending, and accurately forecast every invoice and still see costs rise because the Canadian dollar weakened.
For a large corporation, this is a familiar treasury problem. For a self-employed person, it is Tuesday.
We have turned currency risk into an operating expense
Foreign exchange exposure is normally associated with exporters and multinational corporations. We imagine businesses buying components overseas, selling products internationally or moving money between countries.
But digitization has changed who is exposed to currency risk.
A Canadian graphic designer can work exclusively with Canadian clients, receive every dollar of revenue in Canadian currency and never export anything yet effectively import a substantial portion of the infrastructure required to operate their business.
The same is true of a therapist offering virtual services, an independent consultant, an online retailer, a small marketing agency or a two-person professional services firm.
Their revenues may be Canadian. Their digital supply chain often isn’t.
That mismatch matters because revenues and costs move independently. If sales are collected in Canadian dollars while key operating expenses or cost of goods sold are denominated in U.S. dollars, currency movements can compress margins, sometimes severely.
Large companies have tools for dealing with this. They can diversify suppliers, maintain foreign-currency accounts, negotiate enterprise contracts or use financial instruments such as forward contracts to hedge currency exposure.
Those solutions are much less realistic for a self-employed worker trying to manage bookkeeping between client calls. Formal currency hedging can require expertise, capital and financial sophistication that many very small businesses understandably do not have.
One alternative is a “natural hedge”: earn some revenue in U.S. dollars to offset expenses in U.S. dollars. But that effectively asks Canadian entrepreneurs to export their way out of a structural problem.
Software is now part of our supply chain
There is a larger issue here than exchange rates.
Governments have spent considerable time thinking about supply-chain resilience since the pandemic. We worry, appropriately, about dependence on foreign countries for semiconductors, food, energy, medicines and critical minerals.
But our conception of a supply chain is still remarkably physical.
For many modern businesses, software is infrastructure.
If your scheduling system disappears, customers cannot book. If your payment processor stops working, you cannot get paid. If your cloud platform becomes inaccessible, you may lose access to your files. If the social platform on which you built your audience changes its algorithm or terms of service, your customer-acquisition strategy can change overnight.
A supply-chain disruption does not have to involve a container ship. It can involve a login screen.
The pandemic accelerated this dependency. Small businesses were told, often correctly, that digital adoption was necessary for survival. Businesses moved online rapidly, assembling tech stacks from the tools that were available and dominant. Many of those tools came from U.S. technology companies.
Now another adoption imperative is underway: artificial intelligence.
Again, small businesses are being told they need to adopt quickly or risk falling behind.
That may be true.
But if AI becomes embedded in customer service, marketing, administration, research, bookkeeping and operations, Canadian businesses could deepen their reliance on another layer of predominantly foreign-owned digital infrastructure.
The question should therefore not simply be, How quickly can Canadian small businesses adopt AI? It should also be: What happens to their resilience when they do?
The smallest businesses have the least room for volatility
This problem deserves particular attention because Canada’s smallest businesses do not operate like miniature corporations.
A company with hundreds of employees can have a CFO, IT department, procurement policies and risk-management systems.
A self-employed person may be all of those departments.
Microbusinesses also have less ability to absorb unexpected increases in operating expenses. Their margins may be narrow, their cash reserves smaller and their bargaining power with multinational technology vendors effectively nonexistent.
They cannot call a major software company and negotiate a Canadian-dollar enterprise contract. They click “subscribe.”
This is why a seemingly mundane collection of monthly software charges deserves to be understood as an economic resilience issue rather than simply a budgeting problem.
To start, businesses should inventory their technology dependencies, identify which expenses are denominated in foreign currencies, and develop contingency plans for critical services. They should know what happens if any essential piece of their digital infrastructure becomes substantially more expensive or disappears altogether.
But there is a limit to what individual financial literacy can solve.
If thousands of Canadian businesses depend on the same foreign infrastructure, we are looking at something bigger than thousands of individual purchasing decisions.
We are looking at structural dependency.
Digital sovereignty is also a small-business issue
Discussions about Canadian economic sovereignty tend to focus on the industries we can see: factories, pipelines, mines, farms and physical supply chains.
But increasingly, the infrastructure underneath Canadian entrepreneurship is invisible.
It is a monthly charge on a credit card.
That should change how we think about supporting small business.
Canadian technology procurement is not only a technology-sector issue. The availability of competitive Canadian software, cloud services, payments infrastructure and AI tools can affect the resilience of businesses far beyond the tech industry.
This does not mean Canadians should stop using American technology. Many U.S. products are excellent, and telling an already overstretched small business owner to replace useful software with a different product simply because it is Canadian would accomplish very little.
That means understanding concentration risk, encouraging viable Canadian alternatives, making it easier for businesses to identify where their critical digital infrastructure resides, and treating software dependency with some of the same seriousness we apply to physical supply chains.
Because the great promise of digital technology was that it lowered the barriers to starting and growing a business. And it did.
But in lowering those barriers, we built another kind of infrastructure around small businesses, one composed of subscriptions, platforms and services that they do not own, cannot control and often do not even pay for in their own currency.
For Canada’s self-employed and smallest businesses, the next economic shock may not arrive on a ship or at the border. It may simply appear on next month’s credit-card statement.
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Nick Seebruch, editor
