Strong economic expansion, fiscal support measures, and adoption of new technologies could supercharge business recovery in the next six months.
TORONTO, Oct. 6, 2021 /CNW/ – Canada is expected to undergo the strongest economic expansion in decades, providing small- and medium-sized enterprises (SMEs) with new growth opportunities in the coming months. With a close key on COVID-19 cases, SMEs continue their path towards recovery with a promising growth outlook for the future.
SMEs play a vital role in the Canadian economy accounting for a large share of business, employment, and overall economic activity – they were also some of the hardest hit by the pandemic. Now, many SMEs are looking forward to their recovery and new growth opportunities.
Scotiabank Economics’ Nikita Perevalov released the report, “Small- and Medium-Sized Business Trend Report: Post-Pandemic Recovery” on the state of SMEs in Canada and the key trends shaping the business landscape.
“The pandemic accelerated digital transformation for small- and medium-sized businesses, and many pivoted their businesses in incredibly innovative ways,” said Jason Charlebois, Senior Vice President, Small Business at Scotiabank. “Their resiliency is something all Canadians should be proud of and now it’s our opportunity as consumers to support these businesses as they open their doors again.”
Recovery Has Been Strong but Uneven
SMEs bore the brunt of the economic downturn brought on by the COVID-19 pandemic. According to Scotiabank’s report, SMEs accounted for most of employment losses and, during the peak of Canadian Emergency Wage Subsidy (CEWS) applications between May-June 2020, businesses with fewer than 251 employees accounted for 97% of applicants. Although employment continues to languish below pre-pandemic levels, SMEs make up most of employment gains since April 2020, with 75% of net job gains occurring at firms with fewer than 100 employees.
Looking towards the future, Canada, along with the U.S., will be going through a period of expansion, creating once-in-lifetime opportunities for SMEs to grow, expand into new markets, and develop new products. SMEs already hold majority of trading relationships since 97% of exporters have fewer than 500 employees and strong growth south of the border is expected to boost their profits.
As we look forward into the 2022, growth of SMEs will vary by sector. Some sectors dominated by SMEs, such as construction and real estate, have now fully recovered to pre-pandemic levels in terms of GDP. However, industries such as arts and entertainment, accommodation and food services have struggled, but should see stronger demand in the short-term as rapid vaccination allows high-contact industries to open to customers once again and long-term with strong economic expansion.
Consumer Spending Likely to Shift
With restrictions around travel and dining out, consumers shifted their spending to home renovations, electronics, cars, and housing. Moving forward, we are likely to see demand shift again as vaccinations in Canada continue to increase and previously closed businesses re-open their doors. This rotation in demand should allow some firms to catch their breath and work on alleviating their supply chains strains, while others finally enjoy the return of their customers.
While weak demand was the top concern for businesses through the pandemic, business owners now rank shortages of skilled labour as the number one factor limiting their sales, according to the Canadian Federation of Independent Business. If the federal government’s immigration targets are reached for 2021 and 2022, it should help to address skilled labour shortages reported by business owners.
E-Commerce Leaps Ahead, Sets New Normal
Small Businesses across Canada rose to the challenges presented by COVID-19 and pivoted to new ways of doing business. Many embraced the rise of e-commerce with the share of firms who obtain more than 50% of revenue from online sales rising for all business’ sizes between 2019 and 2020. Additionally, there was a significant shift for firms with 5-99 employees, a segment that historically underutilized technology compared to the Canadian average. With incredibly strong economic expansion in Canada, the next few years present an opportunity for SMEs to rebuild and grow their business.
Setting Your Business Up For Success
Scotiabank shares three tips for SMEs to find success over the long-term.
1. Ensure you have access to capital to rebuild and grow.
Revisit your business plan with fresh eyes. Ask yourself if there are opportunities to save money, finance growth, partner with another company, or tap into a new audience segment or market. Take advantage of government programs for direct financial support to develop new export opportunities, as well as relief funding and resources from government and business associations. A small business advisor can offer support in updating your business plan to take your business to the next level.
2. Pursue new business opportunities or start a business.
Businesses had to pivot and innovate when the pandemic hit, inspiring others to pursue their dreams. Economists anticipate unprecedented GDP growth in the new year and consumers are ready to open their wallets now that businesses can open their doors. If starting a business has been a life goal, now is the time to do it. Scotiabank can help you get started, from borrowing options to, providing payment solutions, our trusted advisors can help you every step of the way. Use our free tools to get started like the Small Business Plan Writer.
3. Lead with digital to stay ahead.
Consumer expectations continue to evolve, with in-person retail experiences increasingly being influenced by digital experiences. From touchless pay, online order and curbside pickup, a new hybrid model of shopping is here to stay. Invest in e-commerce platforms that allow you to reach beyond geographical borders.
For more information on how Scotiabank supports small businesses, visit the Scotiabank Advice+ Centre for business or book an appointment to meet with a Small Business Advisor to help reach your goals.
Scotiabank is a leading bank in the Americas. Guided by our purpose: “for every future”, we help our customers, their families and their communities achieve success through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of over 90,000 employees and assets of approximately $1.2 trillion (as at July 31, 2021), Scotiabank trades on the Toronto Stock Exchange (TSX: BNS) and New York Stock Exchange (NYSE: BNS). For more information, please visit our website and follow us on Twitter @ScotiabankViews.