Even though many small businesses have fully or partially reopened the financial effects of the pandemic have been disastrous. The serious decrease in revenue has meant that many have had to take on debt in order to stay afloat and many are calling for further government financial help.
The Canadian Federation of Independent Business (CFIB) has been tracking small businesses through the pandemic and the most recent survey of more than 4000 businesses found that 40% of them have seen revenues drop by 70% and & 70% have seen revenues drop by at least 30%.
Even with the easing of restrictions by provinces and municipalities allowing for small businesses to reopen it is going to be a long time until sectors such as hospitality and entertainment will start to show a profit again. Ted Mallet the vice president and chief economist of the CFIB has said it is more difficult for small businesses to operate now and despite being patronized by people who love unique products and services, many of these businesses will not survive.
The new reopening rules mean that restaurants are only able to have 50% of their normal capacity. They usually have a profit margin of 3-5% when times are good so despite having pick up and home delivery it is difficult for many to continue to hang on.
The CFIB survey found that 34% of respondents were behind on their major bills such as rent, credit card bills and critical suppliers, that number is 47% in the hospitality sector. More than 25% said that their biggest worry was having to close their business, they are borrowing money to keep going but are building up debt that is going to be difficult to pay down. In addition they have the costs associated with the changes necessary to operate their business post lockdown.
Though it is doom and gloom for many businesses, due to a change in consumer behaviour there are some business that are thriving, including home-gym products, those selling renovation products on-line, hobby shops and bike shops but these businesses are in the minority.
From an article by Ethan Rotberg CPA Canada
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