While the majority remain confident their
business could recover after the crisis, one-in-three worry about
the viability of their business over the next year
TORONTO, May 4, 2020 /CNW/ - A new CIBC study finds
that the majority (81 per cent) of Canadian small business
owners say COVID-19 has negatively impacted their operations, and
many (32 per cent) worry about the viability of their
business over the next year. However, optimism for the longer
term remains strong with most business owners (76 per
cent) confident they can rebound after the crisis. The
majority (85 per cent) agree the uncertainty of how long
COVID-19 measures will last is currently the hardest aspect to
manage.
The COVID-19 pandemic has had an unprecedented impact on the
Canadian economy. Many business owners (54 per cent) say
sales have dropped, and an additional 28 per cent have
had to temporarily shut down operations altogether. Most have made
significant changes to weather the crisis, including reducing
operating expenses (34 per cent), dipping into savings
(29 per cent), laying off staff (25 per cent) and
applying for more credit (15 per cent). Close to
one-in-three (29 per cent) feel it will take a year or two
to get back to pre-COVID business volumes.
"It's clear that entrepreneurs still believe in their
opportunity to grow over the longer term, but are facing
significant issues right now that are leading some to question if
they can sustain their business long enough to move into recovery
mode," says Laura Dottori-Attanasio,
Senior Executive Vice-President and Group Head, Personal and
Business Banking, CIBC. "Seeking the right guidance and advice can
help businesses restructure their finances to weather the current
circumstances, and plan for the future as the situation
evolves."
Cash flow and business volumes are major concerns, with half of
business owners (52 per cent) citing reduced customer demand
for products and services, and one-in-five (21 per cent)
concerned they may not be able to pay staff. Owners are searching
for ways to improve, with 52 per cent trying to reduce debt
levels, 44 per cent looking for more credit to support
operating capital and 39 per cent seeking cash management
and advice.
A number of businesses may diversify or pivot to endure through
the crisis. Many (45 per cent) are seeking ways to use the
current environment as an opportunity to meet a new need, however a
large number (74 per cent) say their business is not
currently equipped to sell or service online.
Business owners should consider three key areas of focus as part
of a plan to manage through the near term economic challenges posed
by the COVID-19 pandemic:
- Get an accurate picture of your cash position
today – identify all potential sources of available cash and
sort them into six categories: available operating funds; accounts
receivable; locked-in investments; market-linked investments;
inventory and other liquid capital, such as a line of credit or the
Canada Emergency Business Account.
Once you have an accurate picture of your cash position, look at
your current obligations — whether that be supplier payments,
employee wages, or commercial rent — to evaluate, manage your net
cash position and consider if you need additional capital from
investors or your bank.
- Forecast your business opportunities in the near term -
in an environment where things change quickly, it's important to
assess the supply and demand options for your business.
Key things to consider are whether your business can remain open to
clients in any way to generate revenue, how much you foresee demand
changing as restrictions from various levels of government evolve
in the coming weeks and months, and pinpointing changes in customer
engagement. Forecasting your revenue generation opportunities over
the coming months can give a clearer view of your cash flow
forecasts and financing needs.
- Be proactive and get help from a variety of channels –
once you've identified cash flow issues in the near term, look at
where you can optimize available resources and opportunities for
additional funding. The latter could include: deferring payments to
suppliers for credit; selling off inventory wholesale; taking
advantage of government programs; contacting your advisor or local
banking centre to see how your bank can help; and deferring tax
payments in line with the Canada Revenue Agency's deferral options.
Also consider contacting your bank to discuss options for business
client payment deferrals and other support.
For business owners looking to pivot or upskill, opportunities
include accelerating digital commerce and interaction capabilities,
re-evaluating supply channels to optimize cost, and evolving
business models by re-thinking distribution channels or changing
billing services.
Other poll findings:
- Of the 26 per cent of business owners who do have online
operations, 30 per cent have seen an increase in sales and
25 per cent say they've remained the same compared to
pre-COVID-19 levels
- 60 per cent of business owners say they wish they could
do more to help their staff
- 78 per cent are thankful for their personal support
system during this period
- 51 per cent say they want to use the current crisis to
learn a new skill to strengthen their business
CIBC experts share their tips and advice to help business owners
manage through the COVID-19 crisis in a new podcast here.
About CIBC
CIBC is a leading Canadian-based global financial institution
with 10 million personal banking, business, public sector and
institutional clients. Across Personal and Business Banking,
Commercial Banking and Wealth Management, and Capital Markets
businesses, CIBC offers a full range of advice, solutions and
services through its leading digital banking network, and locations
across Canada, in the United States and around the
world. Ongoing news releases and more information about
CIBC can be found
at www.cibc.com/en/about-cibc/media-centre.html.
Disclaimer
From April 17th to April 21st
2020 an online survey of 1,020 Canadian Small Business
Owners who are Maru Voice Business Canada panelists was executed by
Maru/Blue on behalf of CIBC. For comparison purposes, a probability
sample of this size has an estimated margin of error (which
measures sampling variability) of +/- 3.1%, 19 times out of 20.
Discrepancies in or between totals are due to rounding.
SOURCE CIBC