Photo Courtesy: Forbes
By Sharyl Jovellana, Ishtpreet Singh, Noah Trenton, Wafa Yunis, SAY News February 23, 2023
Ms. Lori Trenton, a small Mississauga businesswoman, had to close her doors due to the pandemic. She owned an online jewelry shop which required a lot of creativity and a love of crafts. According to her, the pandemic affected her emotionally and mentally as she was not able to use her creative mind. It also affected the sales of the business as most of her goods were shipped to the US and overseas. Large businesses or those that were registered were able to receive a government grant that proved to be beneficial. However, those that operated on a small scale were seriously affected.
The coronavirus pandemic affected almost all sectors of economy from small business as well as the unicorns. Many businesses across the nation experienced disruptions in their supply chains, a reduction in demand for their goods and services, shortages of supplies and inputs, and closures that were ordered by the government. The Unicorns were able to recover after the pandemic due to large client base as well as due to higher market value. The ones that are most impacted by the pandemic are the small business owners or the ones that served the local market. According to the data by Canadian Federation of Independent (CIFB), business more that 1 in 7 businesses are at a risk of permanently closing due to Covid-19. The sector that was most impacted was the Hospitality, as most of the tourist spots were under lockdowns.
- Two-years of COVID-19 for Canada’s Small Businesses
- A summer of reckoning: Saddled with pandemic debt, one in six small businesses are considering closing, study finds
GOVERNMENT FUNDING IS NOT ENOUGH
Despite all of the government funding and assistance, the debt kept on increasing. When the data is compared, large provinces were significantly affected. British Columbia tops the list, followed by New Brunswick and Ontario. We learned from talking with some of the business owners that these were difficult times, but this phase made them mentally stronger.
CAN'T TAKE ON MORE DEBT
Since small businesses employ 98.0% of all Canadians, they have a significant impact on the country's economy as a whole. According to a Statistics Canada survey, the majority of Canadian firms expected to be impacted, with smaller businesses expecting more profound effects, such as a drop in profitability and sales. Small businesses were more likely to see year-over-year revenue declines, and they were also less likely to be able to take on additional debt or implement new technologies.
"Some of them are forced to close for a long period of time but they still needed to pay rent. So, a lot of them needed a loan to help them catch up." - Shanty Sharma
According to Shanty Sharma, a bank employee, some large businesses declared bankruptcy while small businesses took out loans due to financial difficulties during the pandemic. Due to the pandemic most of the business owners were not optimistic about their businesses. In the fourth quarter of 2021, when things started to get bit better with lockdown restrictions easing off, most owners expected their sales to remain the same, with zero or minimal profit.
SHIFTING TO ONLINE MARKETING
Due to frequent lockdowns and shutdowns, small businesses were not able to maintain their cash flow, causing their profits to decline. During these hard times, a lot of small business owners started to sell their products online on Ebay and Amazon. Ms. Trenton also said that she has been learning online marketing and product upselling, both of which she believes are the future of businesses. If we compare the data from 2019 with the one from 2020, it clearly shows that number of businesses shifted to online marketing. Online marketing both helps to sustain profits and to grow the business. This benefits both the owner and the creation of new employment opportunities. ShadesDaddy, for example, is a US-based company that began selling their products on Amazon and, according to the owner, the business has completely changed since then.
You never know when a pandemic or other national emergency will strike, and how it will affect businesses. So, what should the government do? According to CFIB, to give small businesses time to recover, they are urging the federal government to: (1) Announce a freeze in the carbon tax and work to immediately reduce energy costs for small business owners, (2) Halt all current and future tax increases, including the alcohol excise tax, Canada Pension Plan and Employment Insurance premiums, (3) Extend the Canada Recovery Hiring Program for six months and expand eligibility to new businesses, and (4) Accelerate plans to reduce credit card processing fees for small businesses.