The Bank of Canada released the results its 2014 “Small Business Outlook” survey on Monday. I’ve plowed through that report and some other market research on the small business climate in Ontario, and found a couple common themes that may affect your business:
Export market strong, domestic market weak
A weaker Canadian dollar ups the profit margin for exports. This is a big help for manufacturing businesses in particular. Manufacturing, agricultural, and construction businesses are having trouble meeting production demands as it is. Savvy manufacturers are eyeing the increased profits as an opportunity to buy more machinery and equipment to increase production. It’s a particularly well-timed strategy, as most major banks and investors have eased their lending criteria. Overall, this means there’s more cheap money available to finance expansion.
The weaker dollar can hurt businesses that rely on domestic sales to drive them. This is amplified for companies that import a lot of goods – it costs more and more to buy the same ingredients or components. Hospitality and professional services businesses are often the canary in the coalmine for economic slowdowns – with less cash flow, businesses spend less on services. Small business owners are feeling the crunch, and worry that any more price increases will hurt their business. Many are considering absorbing the loss, rather than passing the added expense on to consumers. This is particularly so in Ontario, where a crowded marketplace is putting more pressure on businesses to keep prices down.
Business is good enough to hire
A majority of businesses are hoping to hire new employees in the coming year – many on a full-time basis. While most small businesses report no shortage of workers, many are finding it tough to find suitable new hires, particularly in niche businesses. This may be due in part to the continuing trend of baby boomers retiring, and not enough young workers to replace them. Therefore, employers are competing for talent. A more competitive hiring market can drive up wage and benefits demands – leaving many small businesses unable to compete. Good for talented young workers, not so good for business owners.
On the up-side, small businesses have a great deal more flexibility in tailoring employment to suit the employee – flexible working hours, work from home, opportunity for growth, employee stock options, etc. Well worth it, if you land the right employee!
Here’s the link to the full Bank of Canada report.
Hopefully this article gives you a little perspective on the environment you’re running your business in!