Rising costs threaten small business recovery, says CFIB


Bankruptcy data doesn’t tell the whole story of threats facing businesses, group says

Content of the article

Canadian small businesses face a greater risk of bankruptcy than federal bankruptcy data suggests as rising operating costs complicate their efforts to recoup losses from the pandemic, a business lobby group said Thursday. .

Advertisement 2

Content of the article

Inflation and labor shortages are just some of the factors undermining the ability of businesses to return to normal, according to the Canadian Federation of Independent Business, which releases a report on the recovery. In an interview, CFIB President Dan Kelly said the burden will increase further by the end of the year, as business owners will see another increase in Canada Pension Plan and employment insurance.

“A lot of business owners say they just can’t hang on any longer,” Kelly said, noting that even businesses that have returned to normal sales levels may still not be profitable as costs are well. higher than before.

In its Thursday report, CFIB said more than half of business owners surveyed had yet to return to “normal” pre-pandemic income levels, while nearly two in three are still debt in the event of a pandemic. He said only 10% have been able to repay their debt in full.

Advertisement 3

Content of the article

Many business owners say they just can’t hold on anymore

Dan Kelly

He said a number of companies have stuck around during the pandemic thinking they could live and fight another day, but are quickly realizing that may not be possible.

“We’ve seen increases on almost every line of a company’s budget and it really reduces their ability to make a profit,” he said.

The group noted that many businesses are now running out of money they borrowed during the pandemic, including loans from the Canada Emergency Business Account (CEBA). He also said more than one in six Canadian small business owners said they were considering going out of business.

However, the main focus of the study is on how unreliable official bankruptcy data can be when looking at the state of Canadian small businesses.

Advertisement 4

Content of the article

Data from the Office of the Superintendent of Bankruptcy Canada shows insolvencies have been on the rise since May 2021, peaking in March 2022. But in its report, the CFIB said that data does not reflect other types of bank closings. businesses.

“Our research provides a broader perspective on business insolvency in Canada and shows that the growing number of small business bankruptcies is just the tip of the iceberg,” said CFIB Chief Economist, Simon Gaudreault.

CFIB said its survey data shows that only 10% of small business owners would go out of business if they were unable to keep their doors open. Meanwhile, 46% of businesses facing closure would simply go out of business rather than go through the bankruptcy process.

“One of the important things here is that we don’t just look at business failures as the only measure of business failures or success,” Kelly said. “That only tells part of the story.”

• Email: [email protected] | Twitter:

Advertising

comments

Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. See our Community Guidelines for more information and details on how to adjust your email settings.



financialpost

Back to top button