Why can’t Canadian small business owners have nice things? As customers are returning to Canadian businesses with COVID-19 easing, owners have enough to worry about getting customers back, maintaining a workforce, and looking after health and safety. But are they also going to be rewarded for recovering sales with a nice big dose of inflation to deal with at the same time?
Experts are predicting a rebound in consumer spending as lockdowns ease and people return to shopping again. But for businesses, that rebound could come with higher costs and pressures.
The Canadian Federation of Independent Business (CFIB) is predicting that prices will rise by about 3.3 percent over the next year or so as a result of ongoing delays in the supply chain and shortages in material resources. It should be noted that this figure is based mainly on the prediction of small business owners themselves, rather than any close scientific analysis, but this is the point: owners have a sense of what’s coming, because they’re already living it.
Shortages in everything from shipping containers to lumber and metals to microchips has meant products ranging from food to furniture to cars are in short supply, and suppliers are charging more. Even when shortage of supplies is not an issue, factories are running well behind schedule due to shortages in labour.
All of this translates into higher costs for goods and services, meaning businesses must pay more and wait longer for goods to arrive in their stores. Who ends up covering those increased costs? Consumers.
But those inflationary pressures, coupled with pandemic-related requirements, can also lead to other cost increases for small businesses in rent, payroll or interest payments.
The easiest approach is just to weather the storm and hope things clear up. If inflation is only a temporary situation — one that will lessen as the effects of the pandemic disappear and the economy and social life return to normal — then businesses may choose to just ride it out until things stabilize again. But if it seems that inflation will persist and material shortages and supply chain issues will continue, taking action may be the smart move.
So what are some of the things that businesses can do to minimize the pressures of inflation and keep price increases to the smallest possible amount?
Inflation is worrying, especially when coupled with the ongoing effects of a pandemic. But it doesn’t have to be a disaster. If you can plan ahead and minimize surprises, you can ensure your business is in good shape when normality does return.
Advice and research for Canadian small businesses from our expert team