Canadian Small Businesses Confident They’ll Stay Open Next Year
The bulk of Canadian entrepreneurs (87 percent) say they’ll likely or definitely remain open in the next year as they adapt and begin to recover from the impact of Covid-19, according to a survey by the Business Development Bank of Canada (BDC).
This sentiment comes despite 76 percent of small and medium-sized enterprises (SMEs) losing revenue due to Covid-19, 46 percent has had to cut staff, and 39 percent had to increase debt.
Pierre Cléroux, BDC’s chief economist and VP of research, says an economy that’s “much better” today than at the beginning of the pandemic has boosted confidence among small and medium-sized businesses.
Some sectors, like ICT and real estate, have returned to pre-crisis level, while others, like manufacturing, tourism, food service, entertainment, and oil and gas are still struggling, he said.
“The second reason [for confidence] is, I think, the nature of entrepreneurs,” he said. “To have a business is not easy. You have to be creative. You have to innovate all the time. You have to adapt to the new realities…That’s exactly what they were doing. They’re changing their business models, they’re adjusting to the new realities. The businesses that are doing that, they’re going to be successful.”
The survey also found that while 76 percent of entrepreneurs are ready to resume their activity, with manufacturers significantly more likely to say they’re prepared (91 percent), they know the road to recovery won’t be easy. They face challenges related to the lack of demand, paying expenses, and complying with social distancing rules.
While BDC doesn’t have regional data on these findings, Cléroux said the results are quite consistent throughout the country. The impact of Covid-19 is more sectoral and regional, he said.
Overall, though, the business environment is changing, Cleroux said. People are more cautious with spending and health, and they’re buying online, buying local, and working remotely. These trends are expected to continue beyond the pandemic. So, businesses are also adapting.
Now they want to focus on improving their financial situation by reducing costs and debt. They also want to invest more in technology, as well as focus on telework, selling online and reviving growth. In fact, 40 percent of entrepreneurs plan to invest more in technology within three years.
“Businesses believe that investing in technology is going to help them to become more productive, to reduce their costs, to be more present online, and to allow more of their workers to work remotely,” Cleroux said. “They realize the online business is really increasing.”
Boosting online presence has been one of the most effective ways of adapting, he added.
He said businesses that had online offerings during the lock down did better than those that didn’t. Many businesses have now also started selling online, or if they already did, they’ve improved their websites for better customer experience.
“If you’re able to sell online, it’s a big help,” he said. “The ones selling online can really mitigate the impact in their business.”
Despite this, many SMEs still face challenges when it comes to implementing more technology. The biggest ones include training employees, the lack of internal expertise and knowledge, minimal or slow return on investment, and financially-related risks and challenges.
This is why Cléroux said support for businesses should be targeted to helping with technology implementation.
“I think that’s a really big plus not only for the time of the pandemic, but also for the after pandemic. Because before all of this, our research was already showing that businesses who are adopting technology perform better for the long run.”
Cléroux said a second wave would hit businesses hard, given the struggle they’ve gone through during the first wave. However, he believes a massive lockdown is out of the picture.
“I think [government] strategy is going to be different, which is going to help businesses and the economy. I would be very surprised if we have a total lockdown like with this spring,” he said.
To help with recovery, he said support programs should target the struggling sectors.
“I think we have to focus on some sectors that are really struggling because of the restrictions, you know, the border is closed, people are not traveling as much, so these sectors are going to be much more affected than others,” he said.