What happened: BDC report reveals most small businesses were hit hard by initial impacts of pandemic
Why it matters: SMBs have been tapping into federal programs for assistance but many have resisted developing new business plans to navigate COVID-19 crisis
As the pandemic nears its seventh full month of walloping the global economy, the Business Development Bank of Canada (BDC) is raising concerns not all small businesses have a sufficient economic recovery plan.
An October 7 study from the Crown corporation finds 76% of small and medium-sized businesses (SMB) experienced declines in revenue and profit and nearly half (46%) had to reduce their staffing levels during the first three months of the pandemic.
But more than one in five of Canada’s small SMBs don’t plan on changing their business practices amid the pandemic compared with 4% of large SMBs, according to survey results from 1,000 respondents.
“We were a bit surprised that 21% of businesses said that they were not going to change the way they are doing business,” BDC chief economist Pierre Cleroux told BIV.
“If you want to be successful in this very difficult time, you have to adjust to the new reality.”
Part of that reluctance might be attributed to businesses’ own self-belief, with 87% of entrepreneurs stating they’re confident they’ll make it through the crisis.
The BDC’s report lays out five top priorities among entrepreneurs for navigating the economic crisis:
· Putting finances in order (39%)
· Taking advantage of technology (27%)
· Focusing on telework (25%)
· Selling online (24%)
· Reviving growth (23%)
“Businesses have to be more present online, which is not easy for small or mid-size firms. You need to have the right strategy for the type of product or services you have for your business model,” Cleroux said.
“And selling online is like starting a new business because it’s different. The type of consumers online are a bit different than when they go to the store, the way of doing marketing online is quite different. So some small companies are very successful online. Others have difficulties.”
He said there’s a lot of momentum currently for making investments in technology, but challenges exist depending on the demographics of entrepreneurs.
“Typically, younger entrepreneurs are more tech savvy,” the economist said.
“Having said that, older entrepreneur often have more resources because they’ve been around a longer period of time.”
Cleroux added two federal government initiatives — the wage subsidy and the $40,000 loan program — have proven particularly popular among SMBs from the outset of the pandemic.
“People are quite resilient. The impact of COVID-19 was quite strong on small and mid-size firms but the research is showing people are taking action,” he said.
