Small business is the beating heart of the Canadian economy. Seven in ten people in the private labour force are employed by small businesses, and these organizations generate 38% of the nation’s gross domestic product (GDP). Yet these companies are facing incredible stresses and strains as they struggle to weather the COVID-19 pandemic.
We convened a roundtable of B2B company business leaders from a variety of organizations that are focused on supporting Canadian small businesses. They include a major bank with a strong emphasis on small business, a company that helps entrepreneurs open online stores, a major payment network aiming to help small businesses make and accept payments, a retail industry expert, and an association dedicated to supporting small businesses. These decision makers are all deeply concerned about how small and medium businesses (SMB) are faring in these times, but they do see some hopeful signs as small businesses fast-forward to a more digital future.
“One of the things that is very stark is that the top 100 businesses are weathering the storm better than smaller ones, and that is being driven by digital commerce,” one participant explained. Many small businesses were not prepared for the tumultuous structural changes, it was suggested.
“We are hearing the huge emotional toll the pandemic is having on small business owners, having taken over 60,000 calls from business owners across the country. They are overwhelmingly stressed and doing their best to navigate a constantly changing landscape,” a participant related. “And while we see the numbers of businesses closing permanently, the percentage below normal sales, we can’t forget the impact on individuals. Business owners are paying employees on their personal credit cards. There are people behind the numbers: it is impacting their lives.” Another noted their research revealed that many Canadian SMB owners are relying on personal friends and family for funds, being less comfortable reaching out to more formal lending channels.
Maru’s BizPulse program, a survey of over 1,250 Canadian businesses conducted in September, found that 37% of businesses have relied on personal or family loans or investment during COVID-19; the average business is down 18% in revenue across 2020; 55% say operations will not be back to normal even by the end of 2020; 55% are worried about the long-term viability of their business; and 31% say they are considering bankruptcy/winding down business as a result of COVID-19. These challenges are leading to an emotional rollercoaster for business owners, with 44% of business owners reporting they feel anxious, frustrated, or helpless.
This is a pivotal moment. If consumer behaviour continues to shift to large businesses, we can expect to see repercussions across the entire country. “And that will be sad,” a participant offered, “because it will transform our communities, and the neighbourhoods we live in.”
The situation is clearly dire, but those working with SMB are reaching out to provide support to help these businesses survive. Much of their effort is focusing on helping businesses accelerate a shift to digital.
According to Maru’s BizPulse program, 57% of Canadian businesses envision online sales accounting for more of their revenue in the future. And this shift has begun; overall, online sales account for 24% more of sales now than they did prior to COVID-19, across businesses of all sizes – but this shift has been slower and smaller for small businesses, with just a 17% increase among those making less than $1M in revenue.
“We are now working in many different ways, helping [SMBs] get digital through platforms like Shopify,” one participant said. “We have pulled together an unprecedented number of offers that are living on our small business site, as resources. We typically are not that active in providing these kinds of solutions, but we are trying to attack these digital challenges.”
It is clear that business owners want and appreciate this kind of help. In fact, according to Maru’s BizPulse survey, 82% of Canadian businesses are looking for help or guidance to succeed online.
This shift to digital is seen as a trend that was inevitable. “We have been propelled into the future,” one person explained. “In some respects, maybe this was the shakeup we needed to move forward.”
Another suggested that their SMB customers that have pivoted to digital, are now embracing both models: in-person and online. “Some were incredibly thoughtful about what digital gives their business and what an in-person, face to face experience brings their business,” they explained. Going forward, these businesses will continue to sell through both channels, seeing them as companion approaches.
The firm that helps businesses provide online shops says they are doing a lot of buyer research to see how end consumer habits are shifting. They are doing this because they believe the consumer trends will dictate their merchant’s livelihood. Their objective is to help their merchants understand those changes so that they can pivot in the right way. “We want to help them better understand how they should communicate, and how to understand their consumers’ needs,” they explained.
With a little help from my friends
One bright light coming out of this situation is a willingness to collaborate. As one participant observed, “We are not looking at this as competition. We all are trying to work toward the same objective of supporting small businesses.”
It was acknowledged that the road to recovery will be long, but what sustained collaboration and both short term and long term scenario planning could help speed the journey. “I hope that the spirit of comradery to help small businesses and to work together continues. It has been exciting for me to see, and I certainly have appreciated the level of support and willingness for everyone to roll up their sleeves to try to do something.” One area where organizations have pulled together is to support campaigns to buy from local small businesses.
The Canada United effort, supported by 72 businesses and brands, had the slogan “Show some local love.” It was aimed at encouraging potential customers to buy local products and services, and it also made available grants to small businesses to help them adapt. #SmallBusinessEveryDay is another campaign that also seeks to rally Canadians behind the shop local movement and is running a Big Thank You contest for Canadians to send in their messages of thanks to their favourite businesses. Big Thank You Boxes go to the winning entrants and the businesses they thank.
Loving local but buying global
A challenge many businesses face when going digital, however, is just how easy it is for individual consumers to switch their shopping to a behemoth like Amazon. One participant said “we are starting to build a movement to have Canadians consciously choose where they are buying. There are lots of hurdles, and Walmart and Amazon and all their marketing dollars make it hard to compete.” Buying local may be what people think they want to do, but it is not always how they actually behave.
One participant was exploring the say/do gap when it comes to buying local and supporting small and medium sized businesses. “There is a heartfelt desire to support small businesses, but we are not seeing it play through,” a participant explained. They wondered whether it is driven by lack of awareness, or friction in the online buying process, or price or something else. While the answers to these questions may not yet be clear, what is certain is that there are many organizations working hard to support SMBs as they navigate the stormy waters ahead.
To learn more about how SMBs in Canada are faring, check out BizPulse Canada: a comprehensive study into the strategies, priorities, needs, plans, and outlook of small businesses in Canada. The study employs System 1 and System 2 methods to reveal how SMB owners are feeling, behaving and thinking in this pandemic time.
As we press forward in these uncertain times, please do think of small businesses every day and “show some local love.”