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Businesses have struggled amid Covid-19, with those affected by closures at greatest risk. The pandemic challenges that businesses face, along with opportunities, were outlined in two reports on Monday, and have potential implications for financial planning.

Almost three-quarters of small business owners (73%) are grappling with mounting debt, and 42% are delaying retirement, said a report from the Canadian Foundation of Independent Business (CFIB) that was based on member data.

While many small business owners rely on selling their businesses to fund their retirements, 55% said their businesses’ values had dropped since Covid-19, and 7% said they’ve dipped into retirement savings to finance their businesses.

“The impact on retirement plans underscores just how profoundly hard-hit small business owners and their families have been by this pandemic,” said Simon Gaudreault, CFIB’s senior director of national research, in a release.

Seven out of 10 businesses said government support was critical to their survival in 2021.

At the same time, the average business was more than $170,000 in debt. The three-quarters of business owners who have taken on debt (76%) said they’ll need more than a year to repay it, and 11% were worried they may never repay it.

One in six businesses were at risk of permanently closing, and CFIB said it had 15,000 fewer members as it enters the pandemic’s second year.

Optimism among mid-to-large businesses

Businesses with annual revenues between $5 million and $500 million were relatively positive in their outlooks based on research conducted last month and in the fall.

More than three-quarters (78%) of mid-to-large sized Canadian businesses polled were optimistic about their post-pandemic futures, said a Scotiabank business outlook report.

While the economy and further government restrictions were the top two concerns for these businesses, more than two-thirds (68%) expected to return to pre-pandemic conditions within six months or fewer.

Most businesses (81%) planned to make investments during that period. Top investment priorities were technology (53% of respondents), product or services expansion (52%), digital enhancements (49%) and hiring new employees (45%).

“In our conversations with our clients, we’ve consistently heard that the pandemic has provided them with an opportunity to re-think their long-term priorities,” said Kevin Teslyk, executive vice-president of Canadian business banking for Scotiabank, in a release.

More than half of those polled (53%) expected their businesses would change for the better in some way. Positive change resulted as businesses adopted new strategies, introduced new products and learned to react to the crisis as a team, the report said.

Among CFIB members, 55% of business owners said their business models had or will change permanently and significantly due to the pandemic.

Scotiabank recommended that businesses monitor key areas in the year ahead, including planning for liquidity and cash flow, and testing business models, which could mean expanding while interest rates remain low.