When the COVID-19 pandemic started five years ago, small business owners like Amy Hall of Victoria-based Goldilocks Goods had to learn new things on the fly fast if they wanted to survive.
Business owners will likely have to have the same ability as they face another development with the potential to upend their business model: sweeping American tariffs.
Goldilocks Goods produces food wraps for kitchen and other uses out of beeswax and Hall, the founder and CEO, radically reoriented her business toward e-commerce and online marketing to the point where the business was adding staff rather than shedding it.
"That (switch) really took off," Hall said. "It actually did really well for us. So when we were able to bring people as a group back into the studio (after the initial shutdown), it was a very strange time to be hiring in the middle of peak pandemic."
This willingness to try out new techniques without any lengthy research or preparation has continued to define the approach of Hall.
"We decided to really lean into social media in the last couple of years," Hall said. "TikTok at the time was something I had never been on. I had never posted a video. I knew nothing about it and we just said, 'You know what? We are going to commit to this for a few months.'"
Louise Southall, economist at Xero, a global company offering accounting software and other support services, said one of the long-term impacts of COVID-19 for small businesses has been the adoption of digital tools. She said these tools allowed small businesses to re-adjust their business models. Restaurants, for example, could switch toward offering more take-out options, she said. Other small businesses have been using digital tools to improve their internal processes and productivity, she added.
If COVID-19 was a catalyst for small businesses to lean into technology, it also helped to trigger a period of inflation caused by pent-up consumer demand and government spending in the form of various supports. Central banks around the world have since countered that development by rising interest rates on the premise that it would take excessive steam out of the economy, but at costs. They include higher input costs for businesses and lower purchasing power for consumers.
"We have been fairly lucky in the sense that a lot of our costs of goods haven't changed drastically," Hall said.
High-volume orders of beeswax have helped Hall keep costs relatively steady.
"Since day one that we made our wraps, they have cost the same as they what they have always cost, so in that sense, we have been fairly lucky that haven't had to make any major changes," she said. "But that doesn't mean that it hasn't cost us on our margins or on our own back end."
She also pointed to broader cost-factors like the cost of housing with its effects on being able to hire staff.
Overall, Hall said her business has been able to "weather the storm of inflation" on the input side. But it has not passed without effects.
"I think sales are just down for a lot of small businesses that I speak to. People are just kind of buying less because there is less money to go around. Money is going to things like groceries and rent and housing and those things. So that has been a big impact on the sale sides of things from inflation."
Southall said inflation has been a huge issue for small businesses, with many getting caught on both ends. "So on the one side, their own costs were rising. But then on the other side ... their own customers were feeling the pinch and having to tighten their own belt. So small businesses really got squeezed on this."
With inflation easing, straight policy rates cuts by the Bank of Canada have promised, at least on paper, to stimulate economic growth, but the looming imposition of American tariffs has created uncertainty.
Hall said it has become hard to make long-term decisions.
"So a lot of the conversations at the beginning of the year ... are about planning for the rest of the year. Well, we can't do that right now. We can't strategize."
Hall added a lot of sales happen south of the border.
"So the tariff conversation does have a really big impact on our business."
She said this uncertainty caused by the tariff issue is part and parcel of a larger feeling of exhaustion among small business owners based on conversations she has been having with other small business owners with whom she connects. This sense of exhaustion has contributed to closures, she said. "Sometimes, it is sales, but sometimes, it's also just a business owner who is absolutely exhausted...you can't change your entire business model every five years."
Hall said these unprecedented feelings of exhaustion concern her the most. "That makes me nervous, because of a lot of these businesses could be doing well financially and thriving and contributing to the community," she said.
One potential sign post of this feeling has been the declining confidence among small business owners as measured by groups like the Canadian Federation of Independent Business. The most recent CFIB survey released this month shows long-term confidence among small business owners at an historic low of 26.5 index points on a scale of 100. That figure represents a drop of 22.6 points compared to the last month and ranks 39.5 points below B.C.'s historical average. It also means that confidence among small business owners in B.C. is lower today than it was at any time during the COVID-19 pandemic, the financial crisis of 2008; or the events of 9/11.Short-term confidence was higher at 34.4 points.
Key concerns cited by small business owners for their declining confidence include taxes, regulations and low demand.
Hall said these macro-findings match her micro-view in seeing a close link between the disappearance of the middle class and the state of small business. "(As) one struggles, so does the other, and as one starts to disappear, so does the other," Hall said. "(It) does feel like there are already a lot of hurdles stacked against small- and medium-sized businesses and that they do start to feel more and more insurmountable the longer they keep getting stacked."
Government has recognized these concerns. Recent measures include changes in the Employers' Health Tax, doubling the threshold for the tax to kick in, a change B.C. Finance Minister Brenda Bailey touted during a town hall in Surrey on March 14. She also pointed to other measures such as the attraction of large events to B.C. to boost spending and steps that lower other costs such as housing. She also urged British Columbians to support their local businesses.
"We have more to do, but small businesses are so important to us," Bailey said.
Hall for her part hopes that British Columbians recognize the importance of buying locally during these times, just as they did during the COVID years.
"As inflation costs are rising and people are looking for cheaper goods, it can be really hard to want to go out and support local," Hall said. "But I do think there has been a huge insurgence of that in the last month and I am hoping to just see that continue."
Looking at the big picture, Southall said it is difficult to predict how small businesses in B.C. will navigate the coming years. But the COVID-years have also shown the value of tapping into available expertise and focusing on what is important for any business.
"I think Canadian small businesses and the B.C. small businesses have proven that they are resilient," Southall said. "I have been an economist for 30 years and I feel like the last five years have been more disruptive than any time I can think of. Small businesses have navigated this well and have proven to be resilient. They are going to need all those skills for the period ahead."
