Canada’s gross domestic product gradually dropped when the pandemic began. According to Statistics Canada, between March and April 2020, its economy declined by 18.2%. Business operations only started to improve when the government eased its restrictions following the public health emergency.
Despite consecutive GDP growth for eight months, Canada’s overall economic activity was still lower than it was before the pandemic. COVID-19 even resurged, causing a partial shutdown in several provinces. Thus, businesses remained uncertain about their future.
Understanding the challenges that local businesses face in light of the global pandemic may offer insight into the importance of supporting them during these unprecedented times. Here is a closer look at how the COVID-19 situation affects businesses.
Businesses Shifted Online
Canada’s economy after experiencing a full year of the global pandemic’s effects was 3% lower than its pre-pandemic level. As such, many businesses shifted to online sales. Businesses of all employment sizes saw an increase in their online sales between 2019 and 2020.
Overall, 17.6% of businesses made sales online in 2019, which increased to 21.6% in 2020. During the same period, the percentage of businesses that made 50% or more of their total online sales increased from 6.8% to 10.0%. In other words, these businesses have been relying more on their online operations to make at least half of their profits.
Businesses Adopted New Technology
Following the shift to online operations, more than half of large businesses (those with at least 20 employees) incorporated online collaboration tools into their regular operations. Such technologies included Microsoft Teams, Zoom. They also adopted cloud technology like Dropbox and Google Cloud.
However, smaller businesses were less likely to adopt such technologies and shift to online operations. Not one-third of businesses with 1 to 4 employees and 5 to 19 employees adopted online collaboration tools and cloud technology. The statistics of businesses incorporating various technologies into their regular operations suggest that adapting to the demands of the pandemic is more difficult for smaller businesses.
Businesses Took on More Debt
Apart from shifting online, businesses have been laying off their staff, reducing hours, seeking rent relief, and applying for government funding to keep their operations alive somehow. By seeking external financing out of necessity, many businesses have reached a point where they can no longer take on debts.
Over two-fifths of small businesses reported that they cannot take on more debt. Some larger businesses also reported being in the same boat but were proportionally lower than businesses with fewer employees. Small businesses in financial distress risk getting shut down.
COVID-19 has affected the business landscape for everyone. Small businesses experienced a heavier blow than larger ones with more resources to spare. Regardless of the amount of damage that businesses of all sizes faced, the fact that people have lost their livelihood remains.This global situation has highlighted the importance of supporting local businesses now more than ever. Helping keep businesses in your immediate area stay afloat contributes to your location’s overall economic growth. As lockdown measures remain in place, consider paying for goods and services that are readily available in your area.