By : Sai Sharma
Inflation is a rising issue in Canada.
As inflation ramps up, small businesses are facing hard times.
With the cost of production rising and profits not keeping pace with the rising costs, small businesses in Toronto are finding it hard to survive.
One such business is the Fika cafe in Kensington Market. Yadi Arifin , the owner of the Fika Cafe who has been operating this business for 13 years now shared his struggles of running a business during inflation.
Yadi Arifin has been running the business for a while now. It was started by another couple but they gave up the business. At the time Yadi Arifin was looking to open a coffee shop and was introduced to the couple by a mutual friend. So he bought the business and continued building the brand. He implemented more strategies to make it Nordic style and upgraded the equipment in the kitchen.
“Inflation has affected everybody, particularly small businesses and bakeries. For us, it is the cost of labour, ingredients, and the cost of transportation. It is hard depending on the health of your cash flow. You need to increase prices strategically but not go overboard.” He said.
Some small businesses are even taking on debts to survive. 60 percent of small businesses in Canada believe that the economy has affected them adversely. Their concerns also included the rising cost of gasoline and the rising cost of business insurance.
FINANCING OPTIONS AND GOVERNMENT ASSISTANCE
During such a time small businesses need to have financing options.
BDC (The Business Development Bank of Canada) offers various options for small businesses as well. Small businesses can apply for a loan upto $100,000 from the BDC.
But Yadi Arifin does think that the government can assist small businesses during inflation.
“The Ontario Government is also cutting gas and fuel taxes for six months. Another way is to have financing options.” He said.
SMALL BUSINESSES ARE STILL STANDING STRONG
According to a survey, small businesses are not losing hope and are still optimistic despite all the uncertainties.
In an interview, Jascha Jabes, Scotiabank’s Vice President of small business banking, said “There may be a survivorship bias, because these are small businesses that made it through the pandemic. Not everyone did, and I think those that did are showing incredible resilience.”
The pandemic was an exceptionally challenging time for many small businesses. Many of them had to adjust their prices more than usual. Laty year 8 out of 10 small businesses in Canada had to raise their prices more than usual. Many of them recalibrated their input and reduced their investments to manage their cash flow. Business owners also put in extra hours to trim labour costs. Some of them started using quality inputs and reducing employee benefits. Presently, many small businesses in the country are leaning towards innovation and automation to keep up.
The financial priorities of Canadian businesses include managing costs and identifying efficiencies. At the same time they also need to find new markets for their businesses to thrive.
THE SOLUTION TO THE PROBLEM
Alchad Alegbeh, a research analyst at the Canadian Federation of Independent Business might just have the solution.
CFIB has been the voice of small businesses across Canada for a long time. They advocate the priorities of small businesses and help them regain their rise. They help them support their rise and actively seek out business opportunities for them.
“They should consider increasing prices while keeping in mind what the market can bear. They can assess their expenses and cut unnecessary expenditure. They can try to get grants, loans and investments from other sources as well. They can consider investing in automation which can enhance efficiency and reduce costs. This can help them to navigate the challenges posed by inflation.” Alchad Alegbeh said.
“Given the current scenario, the future does not look very bright. However, it is challenging to make a definite prediction. It depends on the willingness of the government to extend their support to small businesses. The government could reduce payroll taxes and the rate of commodities. Without the government’s support it will become increasingly challenging to survive as a small business in the economy.”
WHAT DOES THIS MEAN FOR THE FUTURE?
Many business owners may be forced to change what they are doing or diversify their sources of revenue. During the pandemic, workers of small businesses had to work remotely. But now a lot of workers have resumed their daily commute to work . The transition hasn’t been smooth for everyone. The prices of fuel are increasing day by day. This is the reason why many workers are closing to work remotely.
However, we do live in an era of globalization. We have multiple resources for our use. The best bet for small businesses to survive in the economy would be making the best use of the resources available to them.
source of images for the ENG: Google images
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