A sign on a shop window indicates the store is closed in Ottawa, Monday March 23, 2020. THE CANADIAN PRESS/Adrian Wyld

Indebted Canadian businesses more ‘fragile’ than during 1st wave, BDC economist warns

The study said 87 per cent of entrepreneurs are confident they will make it through the crisis

A new study says many Canadian entrepreneurs are focused on shoring up their balance sheets after recording a drastic drop in revenues and mounting debt during the first wave of COVID-19.

The Business Development Bank of Canada survey says the top priority of business owners is getting their financial houses in order, including reducing operating costs and improving cash flow.

Investing in technology was also a priority for entrepreneurs, according to the study which also listed a focus on remote work, online sales and reviving growth as other key areas.

The study found that small- and medium-sized businesses were hit hard by the crisis, with 76 per cent reporting a decline in revenues and profits during the pandemic.

Nearly half ending up laying off staff, while about 39 per cent of entrepreneurs took on more debt to survive, the BDC said.

Still, the BDC study said 87 per cent of entrepreneurs are confident they will make it through the crisis.

Pierre Cleroux, BDC’s vice-president of research and chief economist, says his “biggest worry” is the high debt levels of many businesses.

“If there’s a second wave and we have to go into lockdowns, the good news is businesses are more prepared,” he said in an interview. “They’ve worked hard to be more efficient, reduce costs and be more present online.

“The bad news is they are more in debt than they were six months ago, so they are more fragile.”

Cleroux said the transition to remote working and the focus on technology and online sales has been a significant shift.

“I never saw such a momentum in terms of investing in technology,” Cleroux said. “This is going to help them in the long run.”

More than half of entrepreneurs surveyed said remote working helped their business innovate and improved employee productivity.

“For many years, businesses were not really open to remote work because they didn’t think it would be beneficial,” Cleroux said.

“The pandemic has really changed that perception.”

Only one in five entrepreneurs said teleworking hurt innovation or productivity.

The BDC study also found that the pandemic has changed the spending habits of Canadians.

The research said more than 83 per cent of Canadian shoppers were willing to pay more for local products, while 56 per cent made more online purchases during the pandemic.

The study said the importance of e-commerce was highlighted by business owners and that companies that were already selling online reported being less affected by the lockdown.

The BDC said the study is based on two surveys, with 1,000 Canadian small- and medium-sized enterprise leaders and 2,000 consumers polled in May and June.

READ MORE: Focus on innovation, not alcohol, key to survival for restaurants, experts say

The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

“We have to make a call out to address this now so our people don’t have to feel fearful,” said Tribal Chief Mina Holmes. (Carrier Sekani Tribal Council Facebook photo)
Carrier Sekani Tribal Council seeks Indigenous-led task force in northern B.C. hospitals

Request made in an open letter to federal minister Carolyn Bennett

NDP headquarters on election night, Oct. 24, 2020. (Katya Slepian/Black Press Media)
ELECTION 2020: Live blog from B.C. party headquarters

BC NDP projected to win majority government – but celebrations will look different this election

B.C. Green Party leader Sonia Furstenau outlines her party's climate action platform at Nanaimo's Vancouver Island Conference Centre earlier this month. (News Bulletin file photo)
Green leader Furstenau declared victor in her home riding on Vancouver Island

Cowichan Valley voters elect freshly minted party leader for her second term

Submitted
BC VOTES 2020: John Rustad re-elected in Nechako Lakes riding

The result is based on preliminary vote count and the final results will be available after Nov.6

John Horgan has been re-elected the MLA for Langford-Juan de Fuca. (File-Black Press)
Horgan trounces challengers to be re-elected in his Vancouver Island riding

MLA has represented constituency of Langford-Juan de Fuca and its predecessors since 2005

Carolyn and Steve Touhey came across a pod of humpback whales while on their boat Sunday, Oct. 25. Photo supplied
VIDEO: Boaters encounter pod of humpbacks in Georgia Strait

Pod spotted between Comox and Texada Island

Prime Minister Justin Trudeau provides an update on the COVID pandemic during a press conference in Ottawa on Tuesday, Oct. 27, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau says pandemic ‘really sucks,’ and that Christmas gatherings are up in the air

The prime minister encouraged residents to continue to follow the advice of local health authorities

The Williams Lake Indian Band is stipulating no-go zones for mushroom picking in areas burned by last summer’s wildfires. 100 Mile Free Press photo
Who controls mushroom harvesting on Indigenous lands?

‘We don’t necessarily know where the mushrooms grow, how old the stands need to be, those types of things.’

Canadian and American flags fly near the Ambassador Bridge at the Canada/USA border crossing in Windsor, Ont. on Saturday, March 21, 2020. THE CANADIAN PRESS/Rob Gurdebeke
U.S. election results one factor that could impact immigration to Canada next year

The survey polled 1,523 Canadians between Oct. 23 and Oct. 25

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

The voting station mimicked a real voting station in Nicole Choi’s classroom at Chilliwack middle school on Oct. 22, 2020, where students had to show their ID (student cards), be checked off a list, and mark a secret ballot behind a screen. (Jessica Peters/ Chilliwack Progress)
B.C. students choose NDP majority in mock election

More than 90,000 youth took part in school-based election process

Crew transport bus at the Trans Mountain pipeline project work site in Burnaby, March 2020. (Trans Mountain)
Check your workplace COVID-19 safety plans, Dr. Henry urges

Masks in public spaces, distance in lunchrooms for winter

B.C.’s Court of Appeal is in Vancouver. (File photo: Tom Zytaruk)
Judgment reserved in Surrey Six slayings appeals

Six men were killed in suite 1505 of the Balmoral Tower in Whalley on Oct. 19, 2007

Most Read