The Effect of Covid-19 on Small Businesses

It goes without saying that Covid-19 has impacted businesses across the world, and has done so to drastic effects. The news is filled almost daily with stories of businesses that have been affected by the pandemic; and the majority of the stories are filled with negative outcomes.

These outcomes have been heard and seen right across Canada with the Country being severely  affected. Since the start of the pandemic, Canada experienced a drastic drop in its real gross domestic product which eventually saw the economy shrinking by 18.2%, within the space of March and April 2020 which is drastic. 

Of course, by the end of 2020 the Canadian economy had started to rise once again; mainly due to adaptation and stabilization and of stores and businesses. 

Although the economy was hit hard, it was the smaller businesses that were impacted which encouraged this knock on effect to the economy; after all, small businesses do make up around 98% of all employer businesses in Canada. 

So just how did Covid-19 Effect Small Businesses?

Staff, Wellbeing and Employment

During the height of the Covid-19 pandemic, Canada lost more jobs than it had in the last three recessions combined. This was heavily impacted on youth, low-wage workers, women and workers in hard hit industries.  

To dampen the impact on businesses with staff, the federal government did release new programs and various wage subsidies which, due to the urgency, were very generously given which did help the situation somewhat. 

However, that being said, it was too late to stop the more than three million jobs from a workforce of just over 19 million. This did slow down with the introduction of the measures. The most recent data available suggests that employment levels remain just over 635,000 workers below the February peak. 

For those still in work during the Covid-19 pandemic, work was encouraged to be undertaken at home. The Canada Revenue Agency (CRA) released a new, simplified process for deducting home office expenses for the 2020 tax year. 

For millions of Canadians, this was the first year in which they could deduct certain expenses related to working from home. The temporary flat rate method allows eligible employees to deduct C$2 per day from working from home (due to Covid-19) and up to a maximum of C$400. 

This flat rate method helped to encourage millions of workers to work safely from home and helped work forces to continue way into Covid-19 and beyond.

Revenue

It goes without saying that businesses were hit hard financially during the Covid-19 pandemic which we alluded to earlier.

The hardest hit came at the initial outbreak, however, we then saw an upturn in online sales and essential shopping sales which allowed a minor recovery for many businesses. 

When asked, 30% of businesses of all employment sizes expected sales to decrease, and 41.5% of them expected sales to stay the same. Only 11.8% of all business sizes expected sales to increase. 

Covid-19 has had a massive impact on businesses of all sizes across all of Canada and of course the world, and this impact is destined to last for several years to come. However with the right things in place, and of course, the support from government agencies, the recovery will come in time.

I am coaching many small businesses through this pandemic. I help them organize their businesses to be financially efficient and implementing many pandemic practices so they don’t lose their exposure or clientelle. This is not a time to cut your business investment, its a time to be smarter with the investment. If you need help, contact me, David D’Silva and lets make sure your business survives this pandemic.