"The rising costs of doing business may threaten a wave of insolvencies"
Significant challenges and concerns may lie ahead for small and medium-sized business owners in Canada, according to new data from Equifax.
Cash flow management is a pressing concern for 64 percent of Canadian SMBs, with uncertainty about the upcoming holiday season cited as a major factor. Additionally, 53 percent struggle with limited access to business financing, and 18 percent have faced past bankruptcy or insolvency, highlighting their financial difficulties. This complex financial landscape concerns 42 percent of SMB owners.
"The rising costs of doing business may threaten a wave of insolvencies,” said Jeff Brown, head of commercial solutions at Equifax Canada. “Businesses will be dealing with the dual challenges of high inflation and the elevated cost of borrowing. We anticipate an increase in demand for credit, particularly from enterprises wrestling with existing debt. Additionally, companies impacted by natural disasters could experience extended recovery periods and require government support."
Rising interest rates are also having financial consequences, as 75 percent have raised their rates or pricing, and 69 percent believe these rates negatively impact their businesses. Moreover, 57 percent have customers who are past due on payments or invoices, with 46 percent expecting this trend to continue in the next 12 months.
Staffing issues weigh heavily on business owners’ minds, with 53 percent expressing worry, while 43 percent face challenges in recruiting and retaining employees.
"Despite the significant financial challenges they face, small and medium-sized businesses are the backbone of our economy and have shown remarkable resilience, even in the toughest economic climates," said Brown. "They're dealing with staffing shortages, rising interest rates, and supply chain disruptions, but they persevere."
Business owners' confidence in the economy remains low, with only 10 percent reporting heightened confidence for Q4 2023 compared to Q4 2022. This represents a significant decline from 24 percent last year and 33 percent in 2021.
The survey was conducted between August 28 and September 12, 2023. It included 300 Canadian SMB owners in the food, construction, retail, and travel industries.
