Following the onset of the pandemic, Canada experienced a drastic drop in its real gross domestic product (GDP), with the economy contracting 18.2% between March and April 2020. With the gradual easing of pandemic-related restrictions, the business climate began to improve. GDP grew for eleven consecutive months, although overall economic activity is about 1% below February 2020’s pre-pandemic level. While recent months showed an improvement in economic activity, in light of the persistence of COVID-19 and repeated changes in restrictions in several provinces, there remain challenges and uncertainty ahead for businesses. By the second quarter of 2021, the Canadian economy had experienced just over a full year of COVID-19.
Small and medium sized businesses are significant contributors to the Canadian economy. For context, small businesses made up 98.0% of all employer businesses in Canada in 2020, employing 9.7 million individuals in Canada – approximately 64% of the total labour force. By comparison, medium-sized businesses employed 3.2 million individuals (21.2% of the labour force) and large businesses employed 2.3 million individuals (14.8% of the labour force). As such, a significant driver towards economic recovery will be how quickly small businesses in Canada return to pre-pandemic levels.
From the beginning of April to early May 2021, Statistics Canada conducted the Canadian Survey on Business Conditions to better understand the ongoing effects of the pandemic on businesses and business expectations moving forward. Based on the results of the survey, while the majority of businesses in Canada expected to be impacted, smaller businesses expected more significant impacts, such as a decrease in profitability and sales. Small businesses were less likely to be able to take on more debt, have the liquid assets to operate, experience cyber security incidents, adopt or incorporate various technologies, and focus on exports. This article provides insights on the expectations of small business as well as the specific realities faced by these businesses during these unprecedented times.
Source: Statistics Canada
