While the majority of Canadian small business owners remain confident their business could recover after the crisis, one in three are concerned about the viability of their company over the next year, according to a new study by CIBC.
The study finds that the majority (81 per cent) of Canadian small business owners say COVID-19 has negatively impacted their operations, and many (32 per cent) worry about the viability of their business over the next year. However, optimism for the longer term remains strong with most business owners (76 per cent) confident they can rebound after the crisis. The majority (85 per cent) agree the uncertainty of how long COVID-19 measures will last is currently the hardest aspect to manage.
"It's clear that entrepreneurs still believe in their opportunity to grow over the longer term, but are facing significant issues right now that are leading some to question if they can sustain their business long enough to move into recovery mode," says Laura Dottori-Attanasio, senior executive vice president and group head, Personal and Business Banking, CIBC."
The pandemic has had an unprecedented impact on the Canadian economy. More than half of the business owners surveyed (54 per cent) say sales have dropped, and an additional 28 per cent have had to temporarily shut down operations altogether. Most have made significant changes to weather the crisis, including reducing operating expenses (34 per cent), dipping into savings (29 per cent), laying off staff (25 per cent) and applying for more credit (15 per cent). Close to one-in-three (29 per cent) feel it will take a year or two to get back to pre-COVID business volumes.
Cash flow and business volumes are major concerns, with half of business owners (52 per cent) citing reduced customer demand for products and services, and one-in-five (21 per cent) concerned they may not be able to pay staff. Owners are searching for ways to improve, with 52 per cent trying to reduce debt levels, 44 per cent looking for more credit to support operating capital and 39 per cent seeking cash management and advice.
A number of businesses may diversify or pivot to endure through the crisis. Many (45 per cent) are seeking ways to use the current environment as an opportunity to meet a new need, however a large number (74 per cent) say their business is not currently equipped to sell or service online.