Another fiscal quarter, another major obstacle on the road to survival for Metro Vancouver businesses.
That speed bump, according to new data released today from the Greater Vancouver Board of Trade (GVBOT) and the Canadian Chamber of Commerce’s (CCC) Business Data Lab, is inflation.
The obstacle that has been playing havoc with consumers’ budgets in the form of higher prices for everything from accommodation to food and fuel to now tops the list of the five most serious challenges facing local businesses in the next three months. That is the finding in the most recent Canadian Survey of Business Conditions (CSBC) as presented in the Canadian Survey on Business Conditions Report and analyzed by the CCC’s Business Data Lab.
According to the CSBC, inflation is the biggest challenge for 60 per cent of survey respondents.
Business input costs rank second at 47 per cent.
Rounding out the top five are:
•the rising cost of real estate, leasing or property taxes (40 per cent);
•recruiting and retaining skilled employees (38 per cent); and
•rising interest rates and debt costs (38 per cent).
In addition to those challenges, 56 per cent of the 729 Metro Vancouver business respondents to the survey said they anticipate higher operating costs in the upcoming quarter, while 34 per cent expect a significant drop in their profitability and 26 per cent anticipate reduced cash reserves.
Few small and medium-sized businesses were thrown many lifelines in the federal government’s 2023 budget, which was released March 28.
However, Ottawa noted that it has secured commitments from Visa and Mastercard to lower credit card interchange fees for small businesses.
According to federal budget 2023 documents, more than 90 per cent of businesses that accept credit cards “will see their interchange fees reduced by up to 27 per cent from the existing weighted average rate.”
The reductions, according to the budget, will save “eligible small businesses in Canada approximately $1 billion over five years.”
Using the example of a small sports store in Edmonton with annual credit card sales of $300,000, the budget estimated that the store would reap interchange savings of $1,080 per year.
But that is small beer for most businesses in B.C.
As Bridgitte Anderson, the GVBOT’s president and CEO, pointed out in a statement accompanying the release of the CSBC data, higher interest rates are driving up the cost of business inputs, the cost of borrowing and the cost of “virtually every expense associated with owning and operating a business.”
She added that with no relief for small businesses in the recent provincial budget and a 10.7 per cent property tax increase in Vancouver, “many business owners will have no choice but to pass these costs along to consumers in the form of higher prices. All of these cost increases are making it more challenging for businesses to implement new technologies or make long-term investments. As operating expenses go up and profitability expectations go down, business owners are certainly feeling the squeeze.”
Employers in B.C. are already scrambling to find, secure and retain employees. The GVBOT outlined that challenge recently in its Solving B.C.’s Workforce Challenges report. It noted that the gap between available workers and available jobs in B.C. today totals about 150,000 job vacancies and promises to widen to more than one million over the next 10 years.
Skills deficits have already cost B.C. up to $4.7 billion in foregone GDP and $616 million in tax revenue, according to a Conference Board of Canada report.
“Employers are increasing wages for new hires, paying existing employees more, and offering different kinds of training and benefits incentives to recruit and retain talent,” Anderson said. “Attracting employees with the technical skills to help their business thrive continues to be a huge challenge for business owners.”
The CSBC’s 2023 Q1 data was collected between January 3 and February 6.
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