A combination of world events have presented labour shortages, supply chain issues, and cybersecurity weaknesses that can cause SMEs to slow, suspend, or even shut down their work. To help business owners understand the risks on the horizon, as well as how to approach them, Capterra surveyed over 500 managers in Canada on the topic.
The business landscape has undergone many changes since the arrival of the “new normal.” SME owners don’t need to be reminded of the challenges that COVID-19, labour market shifts, and overall digitization trends have brought to their door; many have experienced them firsthand.
Expert advice from those in similar positions can help small business owners prepare for and manage these challenges. To collect relevant opinions on business disruptions into resources decision-makers can use, we surveyed 514 managers of SMEs in Canada on their experiences managing a business over the last two years (for a full methodology, scroll to the bottom of this article).
Supply chain issues
Global supply chains were thrown into disarray with the arrival of the COVID-19 pandemic in 2020. However, many managers of companies that sell products are still struggling with supply chain disruptions. Over three-quarters, (76%) of those surveyed have experienced this problem in the last year.
Most surveyed managers (61%) describe this interruption as a “moderate” one, though 17% say they’ve been impacted significantly. Causes of supply chain disruptions varied, but many were connected to the current instability of supply chains (i.e. supplier-enforced order limits, uncertain fulfilment/delivery times, or relying on a single supplier).
Business owners have little to no control over the operations of their suppliers, but they can prepare themselves in case of emergency.
*graphic of Q 15
In addition to creating a risk management plan for supply chain issues, SMEs can maintain an up-to-date database that unites information from suppliers, warehouses, and their own organization. Staying on top of supply chain information provides oversight and can even be used to predict upcoming issues. Investing in the right digital network is key, such as inventory management systems that enable real-time tracking and reporting.
Aside from digitizing the inventory process, businesses can also take other measures to offset the supply-chain-related bottlenecks. The majority of decision-makers experiencing such setbacks (39%) reported adjusting their product offering based on availability, which helps minimize unfulfilled orders as well as unsatisfied customers. Among other actions taken to address supply chain issues:
- 34% purchased products so as to ensure sufficient inventory
- 33% ordered larger upfront quantities in advance
- 32% worked with local suppliers
- 22% extended lead times
For those experiencing supply chain disruptions, increasing your retail prices is also an option. While many companies would consider this an unwelcome change, the reality is that 78% of managers surveyed have planned to or have already increased their prices to offset rising supply chain management costs.
Effects of the labour shortage
The unemployment-to-job vacancy ratio in Canada is at an all-time low, posing an obstacle to businesses in all industries. Over a third of SME leaders surveyed (38%) said this issue has affected their business.
The negative implications of the labour shortage go beyond empty desks in the office. More than half of those struggling to recruit talent (58%) said they experienced an overload of work on their existing employees, and nearly half (44%) reported a decline in revenue.
*graph of q26 implications of labour shortage
With undesirable effects on both company culture and their overall profitability, SMEs everywhere are wondering how to address the labour shortage. Half of the respondents facing this disruption (50%) have increased their salary offerings to attract more talent. Among the more creative solutions companies employed to combat hiring challenges:
- 35% considered candidates they would not normally consider
- 32% improved the benefits related to the job
- 30% advertised open positions on new platforms
- 26% worked with HR agencies
With many economic experts predicting continued inflation and perhaps even a recession in the future, non-salary-based solutions to the labour shortage are exactly what SMEs need. Seeking advice from human resource professionals is a great place to start, though it can require an investment.
Consumer concerns surrounding data protection are on the rise, as are the risks of ransomware, malware, and other cyber attacks. Although 31% of decision-making respondents say they don’t currently have any security concerns, the majority (69%) reported at least one vulnerability.
To protect against cyber attacks, most company leaders surveyed are using at least one type of security software tool. The most commonly adopted tools are antivirus software (67%), firewalls (56%), data backup tools (51%), and email security managers (43%).
Seeing as over a third of managers surveyed (36%) say their company has experienced a phishing email over the last year, email security managers are a great option for cyber protection. However, careless employees were cited as the most common security vulnerability, exposing a need for specific training to ensure compliance with best practices.
In addition to using digital tools and training to keep your organization protected, companies can also create incident response plans to stay focused on business continuity in case a cyberattack should occur.
Predicting upcoming challenges as an SME often requires much forethought and planning, which some may not be able to carry out. Nearly one in five companies surveyed (19%) thought their companies weren’t investing enough resources in achieving business goals.
When focusing on risk awareness and creating an incident response plan, it’s vital to plan for the possible interruptions that could happen here in Canada. Local risks and compliance requirements can even depend upon the province; seek out advice from local resources when trying to monitor and manage potential disruptions.
For more research reports focused on Canadian SMEs, visit the Capterra Canada blog.