A survey of Canadian business owners by Ownr, an RBC Ventures company, reveals how entrepreneurs are navigating high inflation levels, the changes they’re making to manage the increasing costs, and how COVID-19 has impacted their views of entrepreneurship.
TORONTO, ON – Ownr, Canada’s leading business formation and legal management platform, released new data today that shows existing and aspiring entrepreneurs are increasingly concerned about their cash flow and struggling to forecast where their costs are heading. While many entrepreneurs continue to have an optimistic outlook for their future, inflation and economic uncertainty are undermining growth and recovery even as COVID-19 restrictions lift.
Key survey highlights include:
● One in three (33.5%) entrepreneurs say inflation and economic uncertainty are their most pressing worries right now, while close to 40 per cent (38.9%) are concerned about cash flow.
● Inflation is having a significant impact on how entrepreneurs are running their business, with a third (30.5%) of business owners having already raised their prices by over 10 per cent.
● Entrepreneurs are thinking ahead to tax season: 31.1 per cent say they’re fearful of the total tax burden, nearly 30 per cent are concerned about providing proper records or paperwork, and nearly 30 per cent feel confused about the deductions they’re eligible to claim.
● Some aspiring entrepreneurs found a silver lining in the latest COVID-19 wave, with 30.7 per cent saying Omicron inspired them to take a new career path.
● As Canada looks toward a “return to normal,” 63.4 per cent of entrepreneurs say recovering or growing their business will be their next big challenge.
Impact of inflation on small businesses trickles down to consumers
Coming off the heels of financial hardships caused by COVID-19 lockdowns and restrictions, and without a stable inflation rate, planning future investments and purchases is proving difficult for existing and aspiring entrepreneurs. One in five (19.1%) surveyed by Ownr had yet to start their business and more than half (54%) said insecurity about costs is the biggest thing holding them back.
Of those who have started their businesses, nearly half (48.3%) say they’ve already raised their prices to some extent to combat economic instability, with 30.5 per cent raising prices above 10 per cent. However, the survey shows that, in some ways, inflation is only just beginning to take affect and entrepreneurs are still bracing for its full impact. Thirty-seven per cent of entrepreneurs say inflation hasn’t affected their business operations quite yet, but they expect inflation to increase their costs incrementally throughout 2022. Overall, inflation concerns have soared year-over-year. In Ownr’s 2021 survey, only 20.8 per cent of entrepreneurs marked inflation and supply chain problems as a concern. In 2022, 33.5 per cent said inflation was their single biggest worry, and that sentiment is expected to rise with uncertainty around how inflation will be managed.
“While many pandemic restrictions are ending, high inflation is weighing heavily on entrepreneurs and small business owners,” said Shadi McIsaac, CEO and Founder of Ownr. “Business owners want to grow and preserve any hard fought gains they might’ve made between lockdowns and restrictions, yet many are forced to be cautious about their future plans during this volatile economic and political climate. It’s clear that small business owners are not out of the woods yet, but they continue to be more optimistic about the future today than they were six months ago.
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Despite challenges like inflation, optimism among entrepreneurs holds steady, with half of those surveyed (49.8%) feeling more optimistic than they were six months ago. Many are still turning to entrepreneurship in hopes of gaining more purpose in their lives (28.6%), having creative freedom (19.4%) and greater control over their personal career development (19.7%).
Especially as Canadian companies are laying out plans to bring employees back to in office work, entrepreneurs are proving that there’s an alternative path to financial independence. Two in five entrepreneurs (40.5%) surveyed held corporate jobs before launching their own business, signaling that Canadians continue to see entrepreneurship as a viable alternative to the traditional 9-to-5.
“Small businesses are operating in a time of profound uncertainty, and new geopolitical stresses risk further fracturing their outlook,” said Shadi McIsaac. “In this climate, the impacts to small businesses are often overlooked. We know that business and consumer sentiments can suffer from market shocks of all kinds. But entrepreneurs are learning to be comfortable with being uncomfortable, and that they will need continued support in order to drive their growth and meet their goals.
” Entrepreneurship from 2021 to now:
● 65.6 per cent of entrepreneurs said they need or are relying on some type of government support, and one in four (26%) say their business would not survive without it. Ownr’s previous survey found nearly half (45.9) of business owners were struggling to get adequate funding.
● Despite renewed restrictions, nearly half (46.6%) of entrepreneurs say the Omicron variant wave had no significant impact financially on their business. This reinforces our belief that many entrepreneurs saw opportunities to grow their business during the pandemic. In 2021, one in four (26.7%) entrepreneurs said COVID-19 helped them gain new customers.
● However, entrepreneurs felt burdened by the Omicron variant wave from a relief perspective, with 40.9 per cent of those surveyed saying financial support felt more out-of-reach than before. In 2021, running out of money (43.2%) was a key concern on the list of the biggest worries for entrepreneurs.
About Ownr
Ownr makes it simpler and more affordable for businesses to incorporate, register and confidently handle ongoing legal compliance. We know that starting and running a business takes a huge amount of effort. By simplifying and automating business formation and everyday compliance work, we help small businesses thrive. Ownr has helped over 75,000 Canadians launch their dreams since 2017. Ownr is operated by RBC Ventures Inc., a subsidiary of Royal Bank of Canada. For more information, visit https://www.ownr.co/www.ownr.co/
