Small firms’ sales plunge due to COVID-19By The IJ Staff | March 17 2020 12:09PM
Half of Canada's SMEs are reporting a sales decline due to the economic effects of COVID-19, with one-quarter of them reporting a sales drop greater than 25 per cent, according to a new survey by the Canadian Federation of Independent Business.
"The early economic impacts of coronavirus on Canada's SMEs has been massive," stated Dan Kelly, CFIB president in a March 17 announcement. "Even more alarming is our finding that a full quarter of small firms would not be able to survive for more than a month with a drop in business income of more than 50 per cent."
The survey found that the sectors most negatively affected are hospitality, arts/recreation, retail and personal services. The average cost to those affected by the economic impacts of COVID-19 is about $66,000.
Of the SMEs surveyed, 43 per cent have reduced hours for staff and 20 per cent have started temporary layoffs, while 38 per cent have experienced supply chain issues.
Meanwhile, 42 per cent of SMEs said they will have “zero sales if face-to-face contact becomes impossible,” the survey found.
"CFIB is advising all small business owners to listen and respond to the advice of public health officials in order to keep their employees and customers safe," added Kelly. "However, we must recognize that calls for self-isolation have massive economic consequences for many Canadian small businesses, especially as close to two-thirds of small firms would not be able to quickly shift more than 10 per cent of sales to online or telephone options."
Help needed from governments
"While waiving the one-week EI waiting period and expanding the Work-Sharing program were helpful moves, CFIB is concerned with calls to mandate employers to provide 14 sick leave days at a time when they are already experiencing tremendous cost pressures and decreases in revenues," added Corinne Pohlmann, CFIB's senior vice-president of national affairs. "Governments need to step in and offer direct cash support to employees and the self-employed who are forced to self-isolate, as has happened in the UK, Ireland, Norway, Sweden and Denmark."
Ninety-one per cent of SMEs surveyed said government should offer direct financial support for firms experiencing a significant drop in sales. In addition, the majority of small business owners suggest governments provide temporary tax relief on income, payroll and sales taxes; cancel planned tax increases such as CPP/QPP and carbon tax; delay tax filing deadlines and eliminate penalties for late payments and remittance; and introduce wage subsidies for businesses to retain staff (58%).
"We trust that governments are doing everything they can to ensure Canadians are safe," concluded Kelly. "But we must also ensure the economic survival of our small and medium-sized businesses to ensure we can get back to normal as soon as the threat is over."
To learn more, read the full survey results.