The majority of Canadian small businesses say they are now doing the same or better than they were two years ago before the pandemic hit, according to Scotiabank’s third annual Path to Impact Report.
“As we see reinvigorated consumer demand, businesses are reporting positive sales and revenue numbers, and less cash flow concerns. While it’s encouraging to see more optimism, the road ahead will pose new challenges,” said Jason Charlebois, Senior Vice President, Small Business, with Scotiabank. “Small businesses are facing serious economic headwinds from inflation, rising interest rates, and labour market shortages.
“The resiliency of small businesses is showing through once again as most of them have been through such a difficult period over these last several years with lockdowns and health and safety restrictions as a result of the pandemic. The economy has been exceptionally strong over these last six months, (but it’s) now turning.”
Charlebois said the resilience of small businesses is clearly showing through despite the big economic headwinds and they’re confident in being able to survive a recession and/or another wave of the pandemic.
“What small businesses had to endure the last several years really forced them to act quickly, be very focused on survival, innovating . . . and going through all that they went through in the last several years and now seeing the world coming back to a more normal place, I think rising interest rates, inflation and even a possible recession doesn’t feel as intimidating as some of what they had to endure over the last several years which was really unchartered territory in terms of all the things that happened during the pandemic,” he said.
The Scotiabank Path to Impact survey found:
- 75 per cent of Canadian small businesses surveyed say they’re doing the same or better than they were two years ago – up from 54 per cent in last year’s survey;
- 34 per cent of small businesses say they are being impacted by inflation, with 37 per cent of those businesses saying it is having a significant impact, and four per cent having a critical impact;
- 24 per cent of small businesses say they are impacted by rising interest rates, with 42 per cent of those businesses saying it is having a significant impact, and five per cent a critical impact;
- 25 per cent of small businesses say they are currently being challenged by the labour market shortage and/or are having trouble sourcing materials;
- 83 per cent say they are better equipped today to survive another wave of the pandemic and 81 per cent of small business owners said they are equipped to handle a possible recession;
- 65 per cent foresee needing financial support in the future, and those with higher revenues above $500K foresee needing more than those with revenues under $500k;
- 90 per cent of business owners have turned to someone for advice or support over the past two years, with 49 per cent of those who turned to a financial advisor saying their business is doing better; and
- 11 per cent reduction in businesses reporting cash flow concerns over the past two years.
“With all that’s happening, it’s no surprise that this year, more small business owners have turned to someone for advice. To help navigate these choppy waters, business owners should seek out credible advice and support. Advisors are there to ensure business owners protect the companies they’ve worked hard to build, helping them adapt to global economic challenges and chart a path forward. In fact, those who turned to a financial advisor report that they are doing better than those who did not,” added Charlebois.
Scotiabank has the following tips for small business owners:
- Proactively explore financing options
If you feel your business needs additional financing to withstand future economic headwinds, it’s best practice to be proactive, and start those conversations with your small business advisor sooner than later. Whether it be increasing your line of credit, exploring additional loan programs, or finding support with identifying and applying for government-based assistance programs, your Small Business Advisor can help you plot a course of action to make sure your business is best placed for continued success.
- Don’t let wasteful practices curtail your bottom line
With increasing inflationary pressures, and a myriad of other contemporary economic challenges, it’s never been more important to make sure your business is as streamlined as possible. With 29 per cent of small businesses ranking cutting costs wherever possible as their number one immediate priority, talk to your small business advisor today about where you can find efficiencies in your organization’s operations to make sure you are maximizing your revenue.
- Stay ahead of the curve on trends, and always have a contingency plan
As a business owner, it’s vital to plan ahead and anticipate any changes to the business environment, whether in your marketplace/sector, in your local community, or in your personal life. More than 80 per cent of small businesses surveyed said they received some form of financial relief from the government during the pandemic. Some of those relief loans are set to come due next year so it’s important to work on a repayment strategy now. With the possibility of a recession, continued interest rate volatility, increase in freight costs, and continued supply chain disruptions likely to remain, a contingency plan is one of the best lines of defence.
- Keep digital top of mind
The global economy and advances in technology have created a huge world market, with an array of opportunities for commerce, sourcing labour talent and marketing your business to new customers. What’s more, not all businesses need a storefront. A strong digital presence can mean a lot of the overall operations can be conducted from your own home, and remote and hybrid work options have demonstrated they are here to stay.
- Spot new opportunities
Evolving and learning from past successes and failures is a great way to grow as well as provide a renewed spark and excitement in your business. Revisit your existing products and services and explore if there is a place to add something new. Paying attention to trends in your industry and staying on top of current news can be great sources of inspiration. Be open to uncovering new opportunities and seek out the advice of a Small Business Advisor, who can help you plan your next big idea.