Crippling debt was one thing that ravaged Andrea Smith’s bottom line at her Sidesaddle Bikes store, which she plans to permanently close March 21.
Cost-conscious consumers cutting out discretionary spending hurt too, she told BIV.
Rapid inflation has pushed high prices even higher for most goods and has diminished consumer confidence, she explained.
“The conditions for operating a small business, in Vancouver specifically and Canada more broadly, have become too difficult and too scary to continue,” she said.
Add in U.S. President Donald Trump toying with Canada by invoking on-again-off-again tariffs and it is no wonder why many shoppers are deciding to build a financial cushion supportive enough to sustain them if the economy tilts into recession.
Vancouver rents are so high that they swallow more than half of many workers’ take-home pay, prompting employees to demand higher wages, Smith said.
Rents have slightly declined in recent months, but at an average of $2,526 per month for a one-bedroom unit, the rents are by far the highest in Canada, according to Rentals.ca.
Smith said she pays employees a “living wage” that starts at between $20 and $25 per hour. She has been judicious when allotting hours.
Finding staff, however, is an ongoing problem, she said.
Smith is not alone. Other small-business owners told BIV that they feel the same strain.
The Canadian Federation of Independent Business (CFIB) has determined that falling business confidence is particularly acute in B.C.
Almost all provinces saw large drops in small-business owners’ confidence for how their ventures will perform in the next 12 months, according to the CFIB’s February business barometer.
B.C.’s 3.7-percentage-point drop led the nation, followed by a 3.6-point decline in Alberta and a 3.4-point decrease in Manitoba.
British Columbian small-business owners were the least confident in Canada at 49.2 points, making B.C. the only province with a rank that was less than 50.
“The evolving tariff situation has really put small businesses in a washing machine of sorts,” CFIB senior policy analyst Emily Boston told BIV. “When we look at long-term and short-term optimism at small businesses across the province, we’re seeing that B.C. is clocking in at the bottom of the barrel.”
Indeed, B.C. small-business owners are also the least optimistic in Canada when they look out three months.
B.C.’s rank on CFIB’s 100-point scale is 41.8 when the entrepreneurs look out three months. Boston said that tally is more than 12 points below B.C.’s historical average.
CFIB’s survey also found 70 per cent of B.C. small-business owners said that Trump’s evolving tariff policies had created exceptional uncertainty.
“This is at a time when about three in 10 are already describing their business as being in weak or critical financial health,” Boston said.
She added that all levels of government need to factor in the current low levels of business confidence in the country when making policies.
Businesses, she said, are battered with cost constraints, such as taxes, regulation, insurance and the rising minimum wage.
On June 1, B.C.’s minimum wage is set to rise 2.6 per cent to $17.85 per hour. That’s up more than 57 per cent since 2018.
“Lack of demand remains the main barrier to growth for 59 per cent of small businesses, with that being heavily influenced by the evolving tariff situation with the U.S.,” Boston said.
This lack of demand stems from apprehensive consumers.
The Conference Board of Canada’s consumer confidence index last month found that the trade dispute with the U.S. helped push consumer confidence to the lowest level in more than a year.
The index, a broad measure of how Canadians are feeling about the economy, fell more than 12 points to 52.6 in February. That is the largest one-month drop in more than a year and a half.
“Shelter and gas inflation have ticked up across most provinces in recent months, putting significant pressure on household budgets,” the Conference Board said in a report. “These increases in essential costs are fuelling consumers’ concerns, as households are most sensitive to price changes in core expenditures like housing and energy.”
B.C. residents’ decline in confidence was steeper than the Canadian average, according to the think tank.
“B.C. experienced a decline across all survey categories,” it said. “The share of respondents thinking their current finances have deteriorated compared to six months ago increased by six percentage points, to 37.5 per cent, the highest level since last August.”
Small business owners discuss challenging business climate
Some small business owners who have operated successfully for decades are pushing off retirement.
“I had thought that I would ease into retirement here by doing less but I’m doing as much or more,” said 63-year-old Paul Dragan, who owns the two-location Reckless Bike Stores.
“We don’t have the sales, so consequently we don’t have the staff.”
His lease costs have risen alongside labour costs, but he has not been able to raise prices to sell or rent his bikes, he said.
“We’re just getting squeezed,” he added.
He is not sure what will happen to his business, and he said he would try to dissuade his son from taking over the venture if that son has any interest after he completes university.
Retirement may still be on the horizon, but Dragan said he doubts he will be able to continue to live in Vancouver if he retires in the next 10 years.
The city has simply become too expensive, he said.
Owners of stores that sell other discretionary items told BIV similar stories.
“We’re getting hit from all angles at this point,” said Sunan Spriggs, who owns two CityLux Boutique locations: one on Howe Street in Vancouver and the other one in Toronto.
If Trump levies ongoing tariffs that are met with Canadian retaliatory measures, Spriggs said she expects her dress store’s costs will rise about 25 per cent.
She fears that if she passes on those costs, her products will be out of reach for her customers.
Those customers, she said, may decide to visit the U.S. and buy dresses there.
There are no personal exemptions for cross-border shopping trips to the U.S. that are less than 24 hours, which means that day trippers would legally have to pay duty on any purchases they bring back.
Spriggs said she believes that those duties are not always applied, and that some people find a way to get away with not declaring the items.
Canadians who visit the U.S. for between 24 hours and 48 hours can spend up to $200 on items without paying any duty or taxes. After 48 hours, that duty-free limit rises to $800.
Border officials reportedly started to become stricter about duty limits when Canada launched retaliatory tariffs March 4.
Given the frugal mindset of today’s consumers, however, it is understandable that business owners fear that potential customers will try to sneak U.S. products across the border without paying duties.
