Scotiabank reports Canadian small businesses more optimistic, despite pandemic pains

Friday, October 09, 2020

Company: Scotiabank

Despite the impact COVID-19 has had on the Canadian economy, many Canadian small business owners are optimistic about their ability to move forward, thanks to a mix of resiliency, creative ‘pivoting’ of their business models, and relief programs offered by governments and financial institutions.  

Those are among the top findings in a newly released report, entitled ‘The New Path to Impact,’ which surveyed 500 small business owners across Canada. It was published by Scotiabank to mark Canadian Small Business Month and provide timely insights into the state of mind of Canada’s small business community as it weathers an unprecedented six months of social distancing, public lockdowns and slow sales.

“On top of all the usual challenges, business owners were thrown the biggest curve ball, the COVID-19 pandemic,” notes Jason Charlebois, Senior Vice President, Small Business Scotiabank. “However, our customers and our research tell us that small business owners are cautiously optimistic about their future, and that speaks to the resilience of Canadian small business owners.”

For example, while 60% of those surveyed say their business sales and revenues have decreased, more than two-thirds say their business is better equipped to survive a second wave of the pandemic, and their top priority now is to increase sales through additional channels over the next three months.

Small business owners were frank in their assessment of the pandemic’s immediate impact on their operations, as two-thirds of businesses report being in a worse situation now than pre-crisis. With 50% pointing to declining revenues, 27% say their operations have been significantly affected although they remain open. In contrast, 29% state that they have not been significantly affected and remain open, and a remarkable 12% note that business has actually increased. 

The report also charted the varying levels of impact by business size and industry sector. For example, operators of food/beverage, accommodation and manufacturing firms faced the most significant impact on their operations and revenue whereas financial, insurance and construction firms described their business as being about the same as before the crisis. Larger businesses were more likely to access relief programs than smaller ones, which is part of the reason why Scotiabank has continued to push for the expansion of relief programs and encouraged the government to make them easier for smaller businesses to access.

The survey highlighted the many strategies small business owners chose to weather the uncertainty, with 26% saying they reduced their salaries and payroll, 20% adjusted their business model, 17% offered new products and services and 13% offered their products and services online.

Small businesses also sought relief programs offered by both financial institutions and all levels of government, with 37% saying they accessed the Canada Emergency Business Account and the Canada Emergency Wage Subsidiary, while 16% requested a deferral of loan payments. A third (32%) turned to an advisor at their financial institution for advice and support. As case numbers start to increase once again across Canada, it’s clear the need for ongoing support is greater than ever. 

“Small businesses are integral to keeping the economy and the country strong. While we applaud the federal government for extending a hand up to small businesses across Canada with essential programs, we also strongly encourage them to continue investing in businesses of all sizes as they face more challenges ahead,” said Dan Rees, Group Head Canadian Banking. 

In addition to dispensing invaluable advice and granting additional credit or loan payment deferrals, Scotiabank has emphasized several innovative programs targeting key small business communities including women-led businesses and Black entrepreneurs. Among them, The Scotiabank Women Initiative provides women entrepreneurs with access to capital, mentorship and education through the comprehensive program. We also committed to deploy $3 billion dollars in capital in our first three years. Most recently, Scotiabank announced its support for the Government of Canada’s Black Entrepreneurship Program, which will collectively commit up to $128 million in lending capital to Black-led businesses.

Although the diverse array of relief programs and support proved crucial to many small businesses, the majority of survey respondents are confident that the worst is behind them, with 63% of small business owners saying they do not foresee the need for additional financing to continue their operations. 

In fact, there is an underlying optimism about their ability to survive in the future. Over 40% of business owners say they are “extremely or very optimistic” about the future of their business. And nearly seven in 10 businesses believe they are better equipped to survive a second wave of the pandemic, with smaller businesses (70%) and those on the larger end (75%) leading the pack. 

Reflecting on the report’s conclusions, Jason Charlebois praises the spirit of Canadian entrepreneurs while sharing advice for the future: “Their resiliency has been commendable as they’ve pivoted their businesses or found creative ways to survive. While there is no way to predict the next six months, now is the time to chart a new path forward, by starting a plan, seeking advice early, using the resources available and staying resilient in a post-pandemic world.” 

Research conducted by Maru/Blue on behalf of Scotiabank from August 28-September 3, 2020. A total of 500 completed surveys were collected from a random sample of small business owners across Canada.

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