Canada is expected to undergo the strongest economic expansion in decades, providing small- and medium-sized enterprises (SMEs) with new growth opportunities in the coming months. With a close key on COVID-19 cases, SMEs continue their path towards recovery with a promising growth outlook for the future.
SMEs play a vital role in the Canadian economy accounting for a large share of business, employment and overall economic activity – they were also some of the hardest hit by the pandemic. Now, many SMEs are looking forward to their recovery and new growth opportunities.
Scotiabank Economics’ Nikita Perevalov released the report, Small- and Medium-Sized Business Trend Report: Post-Pandemic Recovery on the state of SMEs in Canada and the key trends shaping the business landscape.
Recovery has been strong but uneven
According to Scotiabank’s report, SMEs accounted for most of the employment losses, and during the peak of Canadian Emergency Wage Subsidy (CEWS) applications between May-June 2020, businesses with fewer than 251 employees accounted for 97% of applicants.
Although employment continues to languish below pre-pandemic levels, SMEs make up most of the employment gains since April 2020, with 75% of net job gains occurring at firms with fewer than 100 employees.
Looking towards the future, Canada, along with the US, will be going through a period of expansion, creating once-in-lifetime opportunities for SMEs to grow, expand into new markets and develop new products.
Consumer spending likely to shift
With restrictions around travel and dining out, consumers shifted their spending to home renovations, electronics, cars and housing. Moving forward, we are likely to see demand shift again as vaccinations in Canada continue to increase and previously closed businesses re-open their doors. This rotation in demand should allow some firms to catch their breath and work on alleviating their supply chains strains, while others finally enjoy the return of their customers.
E-Commerce leaps ahead, sets new normal
Small businesses across Canada rose to the challenges presented by COVID-19 and pivoted to new ways of doing business. Many embraced the rise of e-commerce with the share of firms who obtain more than 50% of revenue from online sales rising for all business’ sizes between 2019 and 2020.
Additionally, there was a significant shift for firms with 5-99 employees, a segment that historically underutilised technology compared to the Canadian average. With an incredibly strong economic expansion in Canada, the next few years present an opportunity for SMEs to rebuild and grow their business.