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The balance magazine/

Dealing With a Recession as a Canadian Small Business Owner

Dealing With a Recession as a Canadian Small Business Owner
December 8, 2022

It’s no secret that small businesses have been the backbone of the Canadian economy for many years. They account for over 99% of all businesses in the country, are a major driver of the economy, and act as the pillars of many of our communities.

However, they are also particularly vulnerable to economic downturns, as they tend to have less access to capital and fewer resources to fall back on in tough times. Unfortunately, this means that they are often the first to feel the impacts of a recession and are often the last to recover.

As a small business owner in Canada, it’s important to be prepared for the possibility of a recession. This doesn’t mean that you have to panic or close your business; rather, it’s important to be proactive and understand the steps you can take to protect your business.

Canadian entrepreneurs are feeling the looming effects of a recession more than ever before. Businesses that were once thriving are now struggling to stay afloat as consumers tighten their belts and cut back on spending. In some cases, small businesses have been forced to close their doors for good.

A recession is particularly hard on SMBs because they tend to be more reliant on consumer spending than larger businesses. Small businesses also tend to have a higher proportion of debt, making them more vulnerable to financial setbacks.

There are a number of things small businesses can do to weather the storm during a recession. Some of the most important steps include:

  • To diversify their income sources. This can be done by increasing sales to existing customers, targeting new customers, and expanding into new markets.

  • Small businesses should also keep their costs as low as possible. Cut costs wherever feasible. This can be done by negotiating better rates with suppliers, renegotiating leases, and automating tasks wherever possible.

  • Finally, small businesses should always be prepared for a recession by having a solid business continuity plan in place and keeping cash on hand. This will help them weather the storm and come out stronger on the other side.

Recession or not, small businesses in Canada are an integral part of the economy and play a vital role in creating jobs and driving innovation. With some careful planning and hard work, small businesses can emerge from the year stronger than ever before.

Are you looking for help understanding your pending cash crunches before they’re obvious? Sign up for free to Driven Insights, our intelligent tool that helps you understand and plan for better business health.

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