Rising costs threaten small business recovery, CFIB says

Canadian small businesses are more at risk of going under than federal data suggests, as rising operating costs make it harder for them to recover losses from the Pandemic, according to a business lobby group.

The Canadian Federation of Independent Business says inflation and labour shortages are some of the reasons why businesses can't get back to normal. CFIB president Dan Kelly said in an interview that business owners will see another increase in Canada Pension Plan and employment insurance payments by the end of the year.

Even businesses that have gone back to normal levels of sales may still be unprofitable because costs are so much higher than what they were in the past.

CFIB said in a report Thursday that more than half of business owners are yet to return to their pre-pandemic revenue levels. Only 10 percent of people have been able to repay their debt in full.

Many business owners are saying they just can't hang on anymore

Dan Kelly

Many businesses stayed around during the Pandemic because they thought they would be able to live and fight another day, but now they realize that may not be possible.

He said that businesses have seen increases on almost every line of their budget.

The group said a lot of businesses are running out of money they borrowed during the Pandemic. More than one in six small business owners in Canada are thinking of going out of business.

The main focus of the study is how unreliable official data can be when looking at the state of small businesses in Canada.

Insolvencies have been on an upward trend since May of 2016 and peaked in March of 2022. The data doesn't reflect other types of business closings, according to the CFIB.

The CFIB's research shows that the number of small business bankruptcies in Canada is just the beginning.

Only 10% of small business owners would file for bankruptcy if they couldn't keep their doors open, according to CFIB. More than half of businesses that are at risk of closing would simply stop operating if they were to go through the bankruptcy process.

Business bankruptcies are not the only measure of business failures or success. It is only the beginning of the story.

Dpaglinawan@postmedia.com and denise.pglnwn are email addresses.

The Financial Post is part of Postmedia Network Inc.

There was an issue with signing you up. Try again.