A sign on a shop window indicates the store is closed in Ottawa, Monday March 23, 2020. THE CANADIAN PRESS/Adrian Wyld

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

COVID-19. (Image courtesy CDC)
City of Wetaskiwin COVID-19 deaths increase to five

New COVID-19 death in the City of Wetaskiwin despite decrease in active cases.

City of Red Deer has nearly doubled its active COVID-19 case count since Feb. 10 and has 75.6 per cent of the Central zone’s active cases. (File photo)
Another new high: Red Deer hits 574 active COVID-19 cases

Province reports 13 new COVID-19 deaths, 430 new cases

Maskwacis RCMP regular members, Community Tripartite Agreement (CTA) members and support staff proudly wore pink in support of Pink Shirt Day on Feb. 24, 2021. Supplied/ Maskwacis RCMP.
Maskwacis RCMP embraces Pink Shirt Day

Maskwacis RCMP engage in virtual presentations with schools on anti-bullying for Pink Shirt Day.

Minister Rick Wilson poses with Katie at the Boys and Girls Club of Wetaskiwin, both wearing her Pink Shirt Day design. Facebook/ Boys and Girls Club of Wetaskiwin.
Be kind and wear pink for Pink Shirt Day

Katie with the Boys and Girls Club of Wetaskiwin created this year’s Pink Shirt Day design.

Black Press File Photo
Valentine’s Day shooting in Maskwacis leaves one male in hospital, one male in custody

19-year-old Francis Edward Nepoose from Maskwacis has been charged with attempted murder.

Bookings for COVID-19 vaccines for people age 75 or older start Wednesday. (File photo by THE CANADIAN PRESS)
Updated: Delays for seniors booking for vaccine appointments

By 9:20 a.m. Wednesday, 4,500 seniors had booked their appointments

NDP leader Jagmeet Singh holds a press conference on Parliament Hill in Ottawa on Wednesday, Feb. 24, 2021. THE CANADIAN PRESS/Sean Kilpatrick
NDP will not trigger election as long as pandemic continues: Singh

‘“We will vote to keep the government going’

Mike Ammeter (Photo by Rebecca Hadfield)
Sylvan Lake man elected chair of Canadian Canola Growers Association

Mike Ammeter is a local farmer located near the Town of Sylvan Lake

Students and staff at Gateway Christian School wore pink Wednesday in support of Pink Shirt Day, a worldwide anti-bullying initiative that was started in 2007. (Photo courtesy of Red Deer Public Schools)
Students, central Alberta community celebrate Pink Shirt Day

Mayor of Sylvan Lake Sean McIntyre supports anti-bullying cause

Red Deer Court of Queen’s Bench Justice Anne Kirker is expected to sentence Satnam Singh Sandhu on Friday. Red Deer Advocate file photo
Updated: Sylvan Lake man pleads guilty to manslaughter for strangling wife in 2019

Kulvinder Sandhu was strangled and died in hospital several days later

Sentencing delayed in the stabbing death of Samantha Sharpe, of Sunchild First Nation. (Red Deer Advocate file photo)
Central Alberta man not criminally responsible for killing his father in 2020: judge

Psychiatrist testified Nicholas Johnson was psychotic when he killed his father

The cover of “Hometown Asylum: A History and Memoir of Institutional Care.” (Submitted)
Ponoka-born author writes history of old mental hospital

“Hometown Asylum: A History and Memoir of Institutional Care” covers 1911 to 1971

Todd Hirsch. (Image: screenshot)
ATB vice president gives financial forecast to Ponoka chamber

Predictions for reopening of the economy and recovery outlined

Most Read