Canada’s COVID-19 winners, losers – and what comes next in 2022

After a tumultuous two years, Canada’s SMEs are adapting to a new normal. Daire Burke, Head of Canada at Swoop, explores whether struggling businesses are getting the help they need to turn their fortunes around

AUTHOR: Daire Burke, Head of Canada at Swoop

Small and medium enterprises (SMEs) are a vital and thriving part of the Canadian economy, providing employment and growth despite the disruption caused by COVID-19. As Head of Canada at Swoop, I’ve seen how Canadian businesses have dealt with the pandemic and seen why some businesses have boomed while others have failed. 

A catalyst for inequality

Around the world, the pandemic has been a catalyst of inequality and we are seeing that particularly in Canada: hospitality, tourism and the health and fitness sectors are really struggling. 

On the other side of the coin are those businesses which have reduced their overheads by closing their offices and wiping out the rent, energy and travel costs from their P&L. 

Provincial governments have started making Small Business Relief Grants available this month for businesses forced to close under the latest set of restrictions. These are generally up to $10,000, but taking headcount as the main metric used to calculate grant entitlement, many small businesses are left with relatively little. Even at the higher end, $10,000 would do little to cover the lost revenue and looming overheads faced by a restaurant or gym forced to close. 

Other schemes to help businesses include partial rebates on energy overheads and tax commitments. Again, these are slow to arrive and often not at the level that makes a significant difference. 

On the flip side are other programs from the Federal Government which have alleviated the pressures and impact of the latest wave of the pandemic on certain businesses. Programs such as HASCAP (Highly Affected Sectors Credit Availability Program) allow businesses to access low-interest loans of up to $1million to cover operational cash flow needs, as well as the Emergency Wage Subsidy Scheme and Emergency Rent Subsidy, which have been lifelines that the Federal Government have extended – though the scope has narrowed so that fewer businesses now qualify for aid.   

What’s gone wrong?

Fundamentally, the biggest issue of all has been a lack of communication between governments and industry. As just one example, Restaurants Canada, the association which advocates for the country’s foodservice industry, has released a statement that says they have been denied meetings with the Ministry of Health. Restaurants Canada says that their members are weakened from previous shutdowns and that while politicians are phasing out help, financial assistance is now needed more than ever.

In summary, it’s been a mixed bag, with some sectors feeling that government schemes should’ve been delivered in a faster and better-targeted fashion. 

Success stories

The obvious winners over the last couple of years have been in eCommerce, represented at both the highest level of the stock market and in the SME sector. Since the start of the pandemic, 72 percent of SMEs have increased their online presence, a smart move because in many cases, online has been the only place where customers can shop. 

This highlights the importance of listening to customers and getting ahead of the trends in customer behaviour, such as the expectation that they can walk into a shop and tap a card. They want digital payments and online marketplaces. 

Other business winners have been those that were ahead of the trend when it came to hybrid and flexible staffing models. Businesses that already gave their employees the option to work from home have found it much easier to make adjustments when their offices have been forced to close. 

Trends for 2022

Going forward, customer experience is going to overtake price as a differentiator: 60 percent of customers expect a rapid response to enquiries and if they wait too long will simply go elsewhere, even if it means paying more. This is good news for SMEs which can add a more personal touch than bigger corporations. 

Inflation, energy costs and supply chain issues will grab the headlines and everyone will feel it. Be prepared for costs to become volatile. 

Canada is a country that relies on immigration, so Federal and Provincial governments have laid out ambitious targets to attract more immigrants to these shores, not least because SMEs make up the backbone of the economy and as Scotiabank found, over one in four SMEs in Canada is run by an immigrant. 

While countries such as the US and UK have found it politically advantageous to give immigrants a hard time, Canada is embracing new citizens and I think this will be to Canada’s benefit: specialised manufacturing is enjoying a resurgence. 

The thing to look out for will be continued disruption in supply chain through 2022. Changing customer habits have affected the normal flow of goods around the world. As an example, I recently spoke to a distributor of pharma products, based in North York, Toronto, who has been in business for 30 years. Until this year, they had not paid more than CAN$6,000 for a shipping container. Recently, they were being asked to pay CAN$28,000. 

The problem is not that there is a shortage of containers, it’s that they are in the wrong place –  and that feels like a metaphor for many of the issues we are still trying to overcome. 

Think of all those businesses that rely on footfall: the coffee shops near offices, the gyms and hotels. There are still plenty of people out there who want to go to the gym, eat out and go on vacation, but the traditional outlets for those needs are no longer being used. The lesson for SMEs is to go out, find the customer and treat them well, because the ‘if you build it, they will come’ mentality is a dangerous roll of the dice. 

Swoop helps SMEs access the funding they need across grants, finance and equity as well as making it easy to find and switch to money-saving deals on products such as business bank accounts, FX and energy. Register now to access the best deals on the market and start making your money work smarter.