Many small businesses are stabilizing as the pandemic recedes, but they’re now challenged by inflation and rising interest rates, says a Scotiabank report, which suggests that financial institutions and advisors can be part of the solution.
The report is based on a survey of Canadian small businesses, in which most respondents (75%) said they were doing the same as, or better than, before the pandemic — up from 54% in last year’s survey. And most were optimistic about the future (73%, up from 69% last year).
However, one-quarter said they were worse off.
“While this is an improvement compared to last year (42%), it’s still cause for concern,” the report said. It outlined the additional concerns now weighing on businesses, including inflation, rising interest rates, supply chain issues and labour shortages.
To address theses issues, about two-thirds of respondents said they required more financing, the survey found, and nearly one-third said their No. 1 priority over the next three months is cost cutting.
Business owners were also increasingly seeking advice. Nearly all (90%) sought advice over the past two years, the survey found, with about half turning to their financial institutions (advisors or the bank’s digital resources).
Among those who sought advice from financial institutions, about half (49%) said their businesses were doing better. But among those who didn’t seek such advice, only 29% said their businesses were doing better.
More support is needed to help businesses grow, the report suggested. The majority (83%) of respondents said support or tools would help sustain or grow their businesses, and 44% said increased access to financial advice would be beneficial.
The report made several suggestions such as exploring financing options and opportunities for efficiencies, establishing contingency plans and exploring digital capabilities.
The Scotiabank report was based on a survey conducted during the last week of August 2022, based on responses from 806 decision-makers at Canadian businesses with annual revenues between $50,000 and $5 million.