Canada's small businesses remain well supported by consumers
The economic challenges for Canada’s small business owners cannot be underestimated, but there are some glimmers of hope.
Research from the Xero Small Business Insights report shows that, while the first half of 2023 saw declining sales and a weakening economy overall, the second half of the year has potential with household income increasing and wages outpacing price increases.
The key for small businesses is to encourage consumers to spend with them.
“Canadian households have had a tough 2023 as cost-of-living pressures continue to be top of mind. Unfortunately, the contrast between the still growing GDP result and the XSBI sales data highlights that small businesses are missing out on the modest spending that households are doing,” said Louise Southall, Economist at Xero. “These results are a great reminder about the importance of shopping with local small businesses - something Canadians did so well during the pandemic.”
Cash flow
Cash flow remains a key issue for small businesses, as a separate poll from American Express Canada has revealed.
The poll found that over half of small businesses emphasize the increasing importance of managing cash flow and working capital but it's more than just numbers with 63% encountering problems due to cash flow issues, mainly impeding growth (51%) and covering operational costs (38%).
One third of small businesses turn down growth opportunities in the last year alone due to working capital constraints and of these, more than a third (37%) of larger firms turned down between 3-5 deals due to capital constraints.
The study also asked business owners about AI and how they feel it will impact their business.
Among the 14% considering AI integration, they are focusing on time savings (59%), process automation (37%) and boosting operational efficiency (36%). Of those not considering AI, 57% are still evaluating if AI fits their business model, 35% grapple with trust issues and 32% have security concerns.
