Alberta Small Businesses Face Rising Costs as 40% Report Weaker Performance: Merchant Growth

Statistics Canada reported recently that Canada’s annual inflation rate rose 3.1% in September. As 36% of Alberta small businesses saw an increased cost of goods or supplies because of U.S.-Canada trade tensions, one in 5 (22%) raised prices this year and another 19% plan to raise them over the next six months. Meanwhile, 26% of Alberta small businesses say they have absorbed higher costs because they couldn’t raise prices without losing customer traffic, says Merchant Growth.

These are the Alberta findings from Merchant Growth’s 2026 Small Business Report for Small Business Month this October, which also found that:

44% cite inflation or rising input costs as one of their biggest business pressures.
40% say their business is performing worse than in 2025.
24% have relied on personal credit, including credit cards, home equity lines of credit or personal loans, to fund their business in the past 12 months.
33% have reduced their salary and 12% stopped paying themselves a salary
14% plan to wind down their business

In an interview with Retail Insider, Hash Aboulhosn, Chief Growth Officer at Merchant Growth and a former small business owner, discussed the current situation.

With 44 per cent of Alberta small businesses citing inflation or rising input costs as a major pressure, how are these expenses affecting profitability, cash flow and day-to-day operations?

Small businesses are being squeezed from both sides. Their costs are going up, while customers are also being more careful about how they spend. In Alberta, 50% of small business owners cited rising fuel and energy costs as a major pressure, making this a particularly big challenge for local businesses.

When costs rise faster than revenue, there’s less money left over to cover everyday expenses, pay staff or invest back into the business. Owners might have to put off hiring, delay buying equipment or cut back on plans to expand. These decisions may help them manage in the short term, but they can also make it harder to grow in the future.

The challenge is that owners can only absorb so much before it starts affecting the financial health of the business. They need to find ways to manage rising costs without compromising their ability to operate and grow.

The report found that 36 per cent of Alberta small businesses experienced higher costs for goods or supplies because of U.S.-Canada trade tensions. How are businesses responding to these pressures, and what challenges do they face when deciding whether to pass higher costs on to customers?

Business owners are having to make some difficult decisions about how much of these extra costs they can absorb and how much they need to pass on to customers. Our research found that 22% of Alberta small businesses have already increased their prices in response to economic pressures, while another 19% plan to do so over the next six months.

The difficulty is that raising prices can help protect profit margins, but it can also impact customer demand. When people are already being careful with their spending, even relatively small price increases can influence where they shop and what they buy.

Economic uncertainty from trade tensions also makes planning more difficult because businesses may not know how long higher costs will last or whether they’ll face further increases. That uncertainty makes it harder for owners to set prices with confidence and plan for the months ahead.

One-quarter of Alberta small businesses surveyed said they absorbed higher costs because raising prices could mean losing customers. What options are available to business owners facing this dilemma, and how can they protect margins without undermining customer relationships?

Absorbing every cost increase isn’t sustainable, but raising prices isn’t always straightforward either. Owners should start by looking at their expenses and working out where they can make savings without affecting the quality of what they offer. That could mean negotiating better terms with suppliers, reviewing overheads or focusing more on the products and services that bring in the strongest margins.

If prices do need to go up, being transparent with customers can make a difference. Explaining why prices have changed and offering different options, where possible, can help maintain those relationships. Businesses may also be able to make smaller adjustments in areas where costs have increased most, rather than raising prices across the board.

It’s also worth looking at cash flow and whether additional financing could help cover costs while the business adjusts. The important thing is to avoid letting short-term pressures build to the point where owners have to make decisions in a hurry. The more clearly they understand their costs and margins, the better positioned they are to protect the business without putting customer relationships at risk.

The report found that 24 per cent of Alberta small businesses used personal credit to fund their operations in the past 12 months, while 33 per cent reduced their salaries and 12 per cent stopped paying themselves. What does this indicate about the financial health of small businesses, and what risks do owners face when relying on personal finances to keep their businesses running?

When owners are using personal credit to cover business expenses or stop paying themselves altogether, it’s usually a sign that cash flow is under real pressure. There are many risks to relying on personal finance to keep a business afloat. Credit cards and personal loans can

come with high interest costs, while borrowing against a home can put personal assets at risk. It can also become harder to separate personal and business finances, particularly if the business continues to need support month after month.

Using personal funds might help a business through a difficult period, but owners need to understand whether there’s a realistic plan to pay that money back. That means taking a close look at cash flow, upcoming expenses and whether the business is generating enough revenue

to cover its costs. If more funding is needed, it’s worth exploring business financing options before personal borrowing becomes a longer-term solution.

With 40 per cent of Alberta small businesses reporting that their businesses are performing worse than in 2025 and 14 per cent planning to wind down, what steps can owners take to strengthen cash flow, assess financing options and determine whether their businesses can remain financially viable?

The first step should be to get a clear picture of where the business stands financially. That means looking at what money is coming in, what needs to go out and when, so they can identify potential cash flow gaps before they become a bigger problem.

There are practical steps they can take, such as following up on overdue invoices, negotiating payment terms with suppliers and reviewing expenses to see where savings can be made. If they need additional funding, they should compare their options carefully and make sure repayments are manageable given their expected revenue.

Financing can help a business through a difficult period to cover costs while it works towards its next stage of growth, but it’s important to be realistic about what the business can support.

Owners need to understand how much revenue they need to break even and whether changes to pricing, costs or sales could realistically get them there.

The important thing is to take action sooner rather than later. The earlier they take that step back and assess the situation, the more options they’re likely to have. Having a clear understanding of the numbers puts owners in a much better position to decide whether the business can get back on track and what changes might be needed to make that happen.