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

Advance polls are now open for the 2020 B.C. election, including the Hope Legion hall. (Emelie Peacock/Hope Standard)
A round-up of Fraser-Nicola election coverage

Undecided voters will find candidate bios, stories on the local race and party platforms

Candidates in the October 2020 B.C. election for the Fraser-Nicola district. (Submitted photos)
Fraser-Nicola candidates address racism, privilege in Oct. 14 debate

Candidates were asked how their work will be influenced by intersectionality

Advance polls are open until Oct. 21 for the 2020 B.C. election, including at the Hope Legion hall. (Emelie Peacock/Hope Standard)
Your Fraser-Nicola candidates on small business and seniors’ cost of living

Candidates also answered questions on Richmond Hill, bringing court back to Hope

Highway alert
Planned closure of Highway 1 at Spuzzum Bridge Thursday

Bridge maintenance will be ongoing during the eight-hour closure this Thursday, Oct. 22

Owen Charpentier, 21, is charged with the Oct. 22, 2019 second-degree murder of Keith Baldwin in Chilliwack. (File)
Pre-trial dates set for Chilliwack man charged with Keith Baldwin’s murder

Owen Dale Charpentier accused in the fourth homicide of 2019 next in court June 2021

With local MLA Adam Olsen looking on, BC Greens leader Sonia Furstenau said a Green government would convert BC Ferries into a Crown corporation Wolf Depner/News Staff)
Green leader Sonia Furstenau promises to convert BC Ferries back into Crown corporation

Promise comes Monday afternoon with five days left in campaign

The RCMP helicopter. (File photo)
Suspect escapes after police pursuit through Surrey, Langley, Abbotsford

Police chase involved two stolen vehicles, including one taken in Mission

IIO Chief Civilian Director Ron MacDonald. (File photo: Tom Zytaruk)
Police watchdog concludes Mounties didn’t shoot Surrey teen at strip mall

IIO finds tragic death of teenager ‘not the result of any actions or inactions’ by the Surrey RCMP

A passer-by walks past a COVID-19 testing clinic in Montreal, Friday, Oct. 16, 2020. THE CANADIAN PRESS/Ryan Remiorz
Canada ‘yet to see’ deaths due to recent COVID surge as cases hit 200,000

Much of the increase in case numbers can be attributed to Ontario and Quebec

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Police confirm human remains were found in a recycling bin in Vancouver on Oct. 18, 2020. (Black Press Media file photo)
Human remains found in recycling bin floating near Vancouver beach

Police asking nearby residents to see if their recycling bin has gone missing

Emergency crews shut down White Rock’s Five Corners district on Feb. 19, 2020 after an altercation left an elderly man in critical condition. (File photo)
Trial dates set in White Rock manslaughter case

Proceedings against Ross Banner, 71, set for June 2021 in Surrey Provincial Court

The many faces of Daon Glasgow. (Photos: Surrey RCMP)
Glasgow found not guilty of trying to murder transit cop in Surrey

Transit Police Constable Josh Harms was shot Jan. 30, 2019 at Scott Road SkyTrain Station

Most Read