A new study says many Canadian entrepreneurs are focused on shoring up their balance sheets after recording a drastic drop in revenues and mounting debt during the first wave of Covid-19.
The Business Development Bank of Canada survey says the top priority of business owners is getting their financial houses in order, including reducing operating costs and improving cash flow.
Investing in technology was also a priority for entrepreneurs, according to the study, which also listed a focus on remote work, online sales and reviving growth as other key areas.
The study found that small- and medium-sized businesses were hit hard by the crisis, with 76% reporting a decline in revenues and profits during the pandemic.
Nearly half ending up laying off staff, while about 39% of entrepreneurs took on more debt to survive, the BDC said.
Still, the BDC study said 87% of entrepreneurs are confident they will make it through the crisis.
Pierre Cleroux, BDC’s vice-president of research and chief economist, says his “biggest worry” is the high debt levels of many businesses.
“If there’s a second wave and we have to go into lockdowns, the good news is businesses are more prepared,” he said in an interview. “They’ve worked hard to be more efficient, reduce costs and be more present online. The bad news is they are more in debt than they were six months ago, so they are more fragile.”
Cleroux said the transition to remote working and the focus on technology and online sales has been a significant shift.
“I never saw such a momentum in terms of investing in technology,” Cleroux said. “This is going to help them in the long run.”
More than half of entrepreneurs surveyed said remote working helped their business innovate and improved employee productivity.
“For many years, businesses were not really open to remote work because they didn’t think it would be beneficial,” Cleroux said.
“The pandemic has really changed that perception.”
Only one in five entrepreneurs said teleworking hurt innovation or productivity.
The BDC study also found that the pandemic has changed the spending habits of Canadians.
The research said more than 83% of Canadian shoppers were willing to pay more for local products, while 56% made more online purchases during the pandemic.
The study said the importance of e-commerce was highlighted by business owners and that companies that were already selling online reported being less affected by the lockdown.
The BDC said the study is based on two surveys, with 1,000 Canadian small- and medium-sized enterprise leaders and 2,000 consumers polled in May and June.
Scotiabank research also detects optimism
Even while two-thirds of small business owners say they’re in a worse situation now than before the pandemic, a new report from Scotiabank reveals 40% of small business owners are optimistic about the future.
The report — based on a survey of 500 small business owners conducted between August and September — found that most business owners (69%) said they’re equipped to survive a second wave of Covid-19.
Despite three in 10 expecting hurdles, the report found that almost two-thirds of small business owners don’t foresee the need for additional financing.
Tips for small businesses in the report include leveraging government programs, and doubling down on digital to increase sales.
“While we cannot predict how the next six months will unfold, now is the time to start focusing on the future, with cautious optimism,” said Jason Charlebois, senior vice president of small business at Scotiabank, in a release.