Canadian Businesses Feel Optimistic About the Future
While experiencing highs and lows over the past 18 months, Canadian businesses have a surprising view of the future as the country peers around the corner of life beyond the pandemic. That’s according to a report that was a joint initiative by Canadian Chamber of Commerce and Statistics Canada, which compared a survey of businesses conducted in April/May 2021 to previous time periods.
Here are some of the takeaways.
Where Canadian Businesses Are Heading
1. Canadian businesses feel optimistic.
Break out those rose-coloured glasses! Over the next 12 months, 73.7% of businesses describe themselves as feeling somewhat or very optimistic. Businesses expect sales to stay steady or go up in 68% of their estimates, compared to Q1 of 2021, when only 53% of businesses felt the same way. This optimism is leading to plans to hire more people along with confidence that businesses could avoid layoffs and closures.
Perhaps not surprisingly, industries less affected by pandemic layoffs feel the most upbeat: 84% of businesses in the healthcare and social assistance field feel optimistic. On the down side, businesses in the retail sector, transportation and warehousing, accommodation and food services are the least sanguine about what the future holds.
2. Smaller businesses feel decidedly less positive.
Those rose-coloured glasses are mainly being worn at larger companies, however. While only 5% of companies with over 100 employees describe themselves as not optimistic, a larger percentage (13% of companies asked) with one to four employees consider themselves not optimistic about the next 12 months.
3. Supply chains pose problems.
Businesses in several industries are finding it difficult to locate the inputs they need within Canada, with construction-related businesses having an especially tough go of it. What’s intriguing is how businesses in manufacturing, wholesale and retail have diversified their supply chains, both to find new suppliers within Canada and outside the country.
For example, 19% of manufacturing businesses are finding new suppliers within Canada—and say they’re sticking with them once the pandemic is over. It’s more evidence the pandemic is permanently disrupting old ways of doing business.
4. Input costs are rising.
Unsurprisingly, difficulty sourcing materials is translating into businesses across multiple fields having to shell out more for supplies. In the construction industry, along with agriculture, forestry, fishing and hunting, 62% of businesses say the rising cost of inputs will prove a challenge over the next three months.
Watch for businesses in many industries to raise prices for their goods and services over the next quarter as they look for customers to pay for at least some of the increased costs now hitting businesses.
5. Small businesses face more problems with cash flow than large businesses.
The pandemic has seen some businesses’ cash flow turn from a waterfall into a trickle. That goes together with trouble in managing debt levels, unfortunately. But the impacts are hitting smaller businesses hardest, with 22% of small businesses predicting difficulty with cash flow and debt over the next three months, compared to 9% of large businesses. What’s more, small businesses are 250% more likely to see their credit ratings take a wallop from the pandemic compared to larger organizations.
Among all industries, businesses in accommodation and food services are hurting the most when it comes to cash flow, managing debt and beleaguered credit ratings.
6. Businesses continue to adopt new digitalization technologies.
In brighter news, businesses have an increasing appetite to bite into new digital tools. Over the next 12 months, the top three new technologies that businesses plan to take on are collaboration tools, security software tools and cloud computing. Overall, 41% of businesses intend to start using at least one new technology over the coming year.
7. Few businesses use digital channels to access international markets.
One vein of untapped potential is businesses’ ability to use virtual connections to find new customers, clients and partners. However, while 27% of all businesses use digital tools to reach out to new customers in their existing markets within Canada, only 6% are reaching out to new customers in international markets.
Hopefully the optimism felt by businesses will be borne out in Canada over the coming months. With luck, those rose-coloured glasses will become a hot new trend.
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