Labour crunch, creditors' aversion, and Omicron variant pose upcoming challenges for independent business owners
They may have an upbeat outlook on the economy, but that doesn’t change the fact that small businesses are on a rocky path to recovery.
In its recently published Canadian Entrepreneur’s 2022 Investment Outlook, which drew on a survey of 1,000 owners of small and medium enterprises (SMEs) in Canada, BDC found 84% had plans to maintain investments or invest more in the next 12 months. A similar number (83%) expect their sales to increase or remain the same, while around three quarters (74%) expect economic conditions in Canada to stay the same or improve.
However, that sunny picture was clouded by labour problems, with 55% of businesses saying they’re experiencing difficulties hiring qualified workers. That finding was echoed repeatedly throughout a new report by the Canadian Federation of Independent Business (CFIB) titled Labour shortages are back with a vengeance.
In a survey of its membership, the CFIB found 55% can’t get all the staff they need for current operations or to satisfy new demand. Another 16% said they were able to get the manpower they needed, but at a significant added cost.
Among the businesses impacted by labour shortages, nearly two thirds (63%) said they can’t find job applicants with the right skillset or experience, while just over half (52%) said they had no candidates at all. Across all small businesses, around one quarter (24%) said they had employees that switched industries, including 37% of businesses in social services and 48% of those in hospitality.
Credit challenges could also test the resilience of Canadian independent businesses, according to Equifax Canada’s Q3 Small Business Credit Trends Report. It found that during the quarter, small business credit established with their suppliers was down by 20% year-over-year, while credit established with their banks was up 30%.
“Canadian businesses remained artificially supported by government subsidies and credit facilities in Q3, but that’s coming to an end,” said Jeff Brown, Small and Medium Business Leader at Equifax Canada. “With the reduction of federal small business support programs, we anticipate an upcoming resurgence for banks and suppliers in the amount of credit that will be requested by small businesses.”
The projected rise in demand for credit, Brown said, will put stress on both lenders and suppliers as they try to discern which small businesses will prove successful even after being weaned off government assistance. But now might not be the time to withdraw assistance, particularly to small businesses, as a new variant of the coronavirus speeds and spreads across the world.
That’s what Finance Minister Chrysthia Freeland argued in front of the House of Commons finance committee as she called on MPs to approve the government’s latest $7.4-billion aid bill before they go on their winter break.
As reported by the Canadian Press, the Liberals want to extend pandemic aid until early May to still-hurting businesses and provide a $300-a-week benefit to workers subject to a lockdown. The lockdown support embedded in the bill, known as C-2, would provide an economic insurance policy should there be another surge of the new variant or other variants of concern.
“I don’t want to give Canadians the impression that I think our work is finished or that I think there are no concerns left with Omicron,” Freeland said. “These are real challenges.”
