A new study says many Canadian entrepreneurs are focused on shoring up their balance sheets after recording a drastic drop in revenues and mounting debt during the first wave of COVID-19.
The Business Development Bank of Canada survey says the top priority of business owners is getting their financial houses in order, including reducing operating costs and improving cash flow.
Investing in technology was also a priority for entrepreneurs, according to the study which also listed a focus on remote work, online sales and reviving growth as other key areas.
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The study found that small- and medium-sized businesses were hit hard by the crisis, with 76 per cent reporting a decline in revenues and profits during the pandemic.
Nearly half ending up laying off staff, while about 39 per cent of entrepreneurs took on more debt to survive, the BDC said.
Still, the BDC study said 87 per cent of entrepreneurs are confident they will make it through the crisis.
Pierre Cleroux, BDC’s vice-president of research and chief economist, says his “biggest worry” is the high debt levels of many businesses.
“If there’s a second wave and we have to go into lockdowns, the good news is businesses are more prepared,” he said in an interview. “They’ve worked hard to be more efficient, reduce costs and be more present online.
“The bad news is they are more in debt than they were six months ago, so they are more fragile.”
Cleroux said the transition to remote working and the focus on technology and online sales has been a significant shift.
“I never saw such a momentum in terms of investing in technology,” Cleroux said. “This is going to help them in the long run.”
More than half of entrepreneurs surveyed said remote working helped their business innovate and improved employee productivity.
“For many years, businesses were not really open to remote work because they didn’t think it would be beneficial,” Cleroux said.
“The pandemic has really changed that perception.”
Only one in five entrepreneurs said teleworking hurt innovation or productivity.
The BDC study also found that the pandemic has changed the spending habits of Canadians.
The research said more than 83 per cent of Canadian shoppers were willing to pay more for local products, while 56 per cent made more online purchases during the pandemic.
The study said the importance of e-commerce was highlighted by business owners and that companies that were already selling online reported being less affected by the lockdown.
The BDC said the study is based on two surveys, with 1,000 Canadian small- and medium-sized enterprise leaders and 2,000 consumers polled in May and June.