Here Are the Latest Stats, Reief Options, and Advice to Get Through This Tough Time
It has been seven months since COVID-19 arrived in Canada and changed the world as we know it. Since then, the pandemic has turned everything on its head. It’s impacted the way we live our lives, from how we work, socialize, spend time at home, and take care of our health.
The ‘new normal’ isn’t entirely negative (we’ve enjoyed our fair share of home-cooked meals, home improvements and hobbies we never had time for). Still, there’s no denying that we’re living in difficult economic times, with small businesses among those hit the hardest. If you’ve found your work has suffered during this period, it’s only natural to start questioning the future. What can you do to help your business survive these huge hurdles ahead?
We want to ensure that you’re well-supported during these uncertain times. This guide will look at the facts and figures to help you understand your situation and lay out your options for relief. We’ll delve into:
- The numbers and statistics related to COVID-19 and the way it has impacted small businesses
- The types of businesses that are struggling most vs the industries that are staying afloat, or even booming
- The resources and relief currently available to small business owners
We’ll also be analyzing the last recession to understand what went wrong, and what you can do to help your business going forward. There is valuable information to be gained from the past and reflecting on what worked and what didn’t.
Finally, we’ll leave you with our best tips to keep your business going despite the current challenges you might be facing. Let’s dive in:
How has COVID-19 impacted small businesses in Canada?
To date, Canada has had over 124,629 confirmed coronavirus cases. Beyond its impact on the public’s health and upon the country’s medical institutions and their governing bodies, COVID-19 also presents significant implications for business owners, and the economy.
According to Statistics Canada, in April 2020, small businesses were more likely to see revenues down by 40% compared to those in April 2019. “Small businesses with 5 to 99 employees were more likely to report laying off at least one staff due to the pandemic.” In many cases, companies that have not laid off employees have opted to reduce wages. In July, the Canadian Federation of Independent Business (CFIB) reported that one in seven small businesses were at the risk of insolvency as a direct impact of COVID-19. This figure is in addition to companies that have already closed doors between February to July 2020. A report put out by the same organization shows that only within the province of Ontario, SMEs have taken on a combined debt of $50 billion post-pandemic.
Currently, common issues that small businesses are facing include:
- The need for crisis scenario planning and management
- Cash flow management and concern about defaulting on loans
- Managing their workforce and redeploying employees where they are most needed
- Ability to retain employees
The good news is, there are some signs of recovery. According to a poll conducted by Reuters that took into account economist opinions, it is predicted that Canada’s economic recovery will be better than previously anticipated.
An article from CTV News explains that Canadians are still purchasing, even though the types of purchases they make may differ from those in the pre-COVID-19 past. Online shopping sales have surged in numbers, as well, real estate markets made a comeback beginning in June of this year.
Who is struggling the most?
COVID-19’s impact has been felt not just in Canada, but worldwide. Drastic but necessary lockdown measures have forced a variety of industries to shut down. According to Statistics Canada, between February and April, Canada lost nearly 2 million jobs. Although by July, we were able to reclaim almost 1 million of them.
Here is a breakdown of some of the industries that have been hit the hardest:
According to André Léonard and Sarah Lemelin-Bellerose at Canada’s Library of Parliament, it is estimated that businesses in the arts and recreation would see up to 30% closures. Hospitality would see 27% closures. Arts and recreation include gyms, venues and arcades. Hospitality comprises restaurants, hotels and caterers. Between March and April, COVID-19 cost the foodservice sector 800,000 jobs.
- Accommodation and Food Services
A Restaurants Canada survey of foodservice companies showed that many have considered permanent closure due to COVID-19. According to the Hotel Association of Canada, in March, hotel occupancy was less than 10% in Canada.
- Arts, Entertainment and Recreation
Saskatoon Tourism estimated the Juno Awards’ economic impact at $9 million before the ceremony was cancelled in March. An arts center in Banff and orchestras in Calgary, B.C. and Winnipeg, laid off hundreds of employees. Cancelling or postponing events where people gather, such as concerts, theatre, film and literary festivals, and outdoor specialty markets have seriously impacted workers in the events and tourism industries.
Airlines have laid off thousands of employees. Taxi companies have also seen ridership drop to devastating levels.
- Retail Trade
For some businesses, purchases are not being made because they are being put off or will never happen. In-person shopping opportunities have been curtailed heavily. However, in some cases, online shopping is seeing more robust growth.
- Oil and Gas Extraction
The price of oil has fallen significantly, globally. Many companies in Canada had to “downward” revise their expenditures by 20% to 57%, and their production by 5% to 8%.
Some auto companies in Ontario temporarily halted production to ensure their workers’ safety and in response to declining global demand.
There’s no denying that there has been a radical shift in lifestyle. This undoubtedly means some businesses have benefited from the “new normal.” Among industries that have been minimally impacted by COVID-19 are the scientific, information technology, and finance sectors.
For example, Zoom or Slack are now household names, even though many people had never heard of them before lockdown. Retailers of bicycles and exercise gear have seen tremendous boosts in sales. They have home and garden stores, with people taking to pursuing hobbies such as novelty baking or embarking upon home renovation projects.
Switching to convenient, contactless online sales systems have helped many retailers and small businesses stay afloat amidst the pandemic.
Where can you get help?
There are various types of relief available to support small business owners during this time and endless resources you can use to find help. If you’re feeling overwhelmed and concerned for your business, have a read through the following links to know what your options are, and where you can seek help if necessary.
Start with the official resources to find up-to-date information as well as government advice:
- The Public Health Agency of Canada empowers Canadians to improve their health. Many of its activities focus on preventing disease. Visit this website to get updates on COVID-19.
- The World Health Organization contains advice for the public as well as up to date news and figures.
The Federal Government of Canada and certain provincial and territorial governments have announced various funding initiatives for small businesses. The following links provide details below:
- Innovation, Science and Economic Development Canada (ISED) A $962 million support fund is now available to businesses and communities affected by the pandemic. Companies in sectors such as manufacturing, technology, tourism and others that are key to the regions and local economies are eligible to apply.
- Innovation, Science and Economic Development Canada (ISED) provides comprehensive resources, including procedures for applying for wage subsidies, work-sharing and tax deferrals for Canadian Businesses.
- The Small Business Help Centre is set up by the Canadian Federation of Independent Business (CFIB) to deal with COVID-19 related concerns.
- The Business Development Bank of Canada, a financial institution devoted exclusively to entrepreneurs, provides informative webinars ranging from topics such as “How to digitize your business and gain a competitive edge,” to “How to increase sales for your Food & Beverage business.”
- Support for businesses in Ontario: information and advice to help companies navigate the economy during COVID-19, especially concerning the re-opening of the province.
Some building-specific resources may be helpful, depending on your industry. If these apply to you, you can find them here:
- Construction site health and safety during COVID-19 in the province of Ontario. Here you can find best practices to help construction employers understand their rights and responsibilities while operating during COVID-19.
- COVID-19 safety measures from the Construction Safety Alliance in the province of British Columbia. Actions range from advice related to working on-site, as well as working from home.
What is a recession?
It appears Canada, and much of the world is heading towards a recession – perhaps the worst in decades. While this may sound scary, remember that we have been through recessions before, and we have always come out on the other side.
It can be helpful to look back on past economic hardships and see what can be learnt from our history. There are often patterns that repeat themselves, and you can use these to predict how things might work out and, therefore, what you can do to minimize the impact in your own life.
Firstly, let’s understand what a recession is. A recession is defined as a period of temporary economic decline, during which trade and industrial activity are reduced.
We generally expect a country’s economy to grow as its citizens build wealth due to the increase in the value of the goods and services it produces. These goods and services are referred to as Gross Domestic Product (GDP). When GDP starts to decline, and then continues for two three-month periods in a row, it becomes known as a recession.
Due to the sudden GDP drop due to COVID-19, the current recession could be the worst the world has experienced in the past hundred years. However, many are hopeful there will be a recovery as the steep decline was due to many businesses being forced to shut down. Already, there have been reports related to recovery.
What can we learn from the last recession?
The 2008 recession, also known as the Great Recession, took a lot of people by surprise. It began after the global credit crunch that, in essence, left global banking systems short of funds. It resulted in a prolonged period of low or no growth and a rise in unemployment, leaving many people in a dire financial situation.
Here are the steps that you can take to minimize the impact of the current recession we are experiencing:
- Diversify your skills. The classic case of “don’t put all your eggs in one basket” is more relevant now than ever. Those who will get through this recession are willing to adapt and hone different skills. In a downturn, the needs of a community change, and your business needs to be able to shift to suit those needs – not the old needs that may no longer be relevant.
- Don’t get too comfortable. You may have thought your business was booming and that it can only go up from here. History has shown us that we never really know what is around the corner, so we must always prepare for the worst. However, don’t let this make you a pessimist. Instead, allow yourself to find comfort in the fact that your business is prepared for whatever challenges might come your way.
- Cut down unnecessary spending. Protecting your cash flow is vital right now. Whenever we face an economic crisis, we get a reality check on our finances. Perhaps you can think of previous spending habits and purchases that were over the top because your business had more funds. Now is the time to rein it in and not make any significant financial decisions until things are a little more stable. Now would also be an excellent time to review your inventory costs and make cuts where possible. Here are some useful tips to help you improve cash flow.
- Stay relevant. Now is not the time to go quiet. Instead, think about what you can do to win new customers and retain old ones. Contrary to popular belief, you do not want to be cutting back on marketing at this time. Instead, use it to stand out against the competition and build brand awareness. Monitor your market carefully and make sure that you are staying ahead of the curve. Take a look at our marketing masterclass to learn how to make a more effective plan for your business.
- Be patient. The last recession lasted only two years, and the financial sector had mostly recovered by mid-2009. While sacrifices may be necessary right now, just know that this does not mean the changes are here to stay. One day this will all be a distant memory.
- Stay safe. For those in service-oriented industries, implement safe distancing practices and the use of face-shields and Plexiglas barriers as needed. Your employees’ safety is essential for the overall health of your business.
We are living in unprecedented times, and it is entirely reasonable to feel anxious by the uncertainty surrounding your own business and the economy as a whole. But, remember: knowledge is power. Arm yourself by reading and learning about the resources and services available to you to ensure you are getting all the help you need.
It is essential to know that you are not alone and that many small business owners and contractors are in the same position. We will all get through this together. To connect with other business owners like you, and learn more valuable tips and tricks, consider joining our Facebook group.