Financial recovery from a tough start to the decade remains a key concern of Canada's entrepreneurs
Almost four in ten Canadian entrepreneurs say that their business is in good shape, roughly in line with their sentiment at the end of 2019.
Meanwhile, 17% said that their situation is bad, again in line with the pre-pandemic reading, according to new research from the Canadian Federation of Independent Business (CFIB).
The organization’s Business Barometer at the end of 2022 revealed a slight increase in the 12-month index (to 50.9) but this remains low compared to historic levels and is around the level of recession periods.
"Although it is encouraging to see some things going back to normal, such as how entrepreneurs perceive the overall state of their business, we have to recall that recovery, especially on the financial side, remains elusive for too many", said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. "Our Small Business Recovery Dashboard shows 52% still have below normal sales and 58% carry outstanding pandemic debt, for an average of more than $114,000."
Some optimism
Although business remains challenging, there are some more positive signs at a macro level with inflationary pressures beginning to ease.
CFIB’s research reveals that average 12-month price plans saw a small uptick to 4.1% in December (they were at 4.0% in November), while wage increase plans have dropped to 2.9%. Both are still historically high but have come down from their mid-year peaks.
"The post-holiday months are typically where businesses see a dip in activity so some of what we're seeing is seasonal and expected. However, the fundamental situation for small businesses is far from rosy as they're under a huge cost pressure, feeling the pinch of inflation and the burden of pandemic debt," Gaudreault concluded. "Very high costs of doing business and a slowing economy are likely to challenge many businesses' budgets and survival in the upcoming months."
