The daily, which is a part of Stats Canada released a survey on March 5th on how business owners felt about the current business climate under the government’s draconian Covid-19 restrictions and what they expect in the future – the results were harrowing.
The losses are big
Over two-fifths of all businesses (41.8%) and almost three-fifths (56.4%) of businesses in the accommodation and food services industry expected their profitability to decrease over the next three months. At the same time, over one-tenth of businesses reported (14%) expected they would raise prices in the next three months – although this is down from the previous 18.1% reported in the last business cycle.
While more than seven-tenths (70.6%) of businesses expected their number of employees to remain the same over the next three months, this is down from nearly three-quarters (74.1%) of businesses last cycle. Over one-tenth of businesses surveyed (11.7%) expected their number of employees would decrease over the next 3 months – up from 10.4% in the last business cycle.
Restaurants are being hammered the hardest
Due to the government’s draconian Covid-19 approach that has limited in-person dining – the restaurant industry has been decimated. Close to one-third (29.6%) of businesses that provide accommodation and food services expected a reduction in the number of their employees over the next three months – up from the 22.5% reported in the previous cycle.
Nearly one-quarter (24.9%) of businesses in the accommodation and food services industry reported that they could only operate at their current level of revenue and expenditures for less than 12 months before they would have to consider the closure of their business or bankruptcy.
Businesses have it rough in general – for the most part
Over half of businesses surveyed (51.3%) did not know how much longer they could continue to operate at their current level of revenue and expenditures before they would consider closure or bankruptcy. Roughly, one-tenth of all businesses reported that could only continue for less than 12 months.
How long until massive job loss?
Nearly half (46.4%) of businesses did not know how long they could continue to operate at their current level of revenue and expenditures before considering laying off staff, while over one-fifth (21.3%) reported they could continue for less than 12 months. In addition, 2.4% of business owners reported that they have plans to close their business within the next year.
Roughly one-third of all businesses expected fluctuations in the demand of their products (31.4%) or insufficient demand (29.2%) to be obstacles that their businesses would have to face over the next three months. Perhaps more concerning is that one-quarter (25.5%) of businesses expect the rising cost of inputs to be an obstacle – that is to say, the rising cost of labour and goods to produces goods is a concern for one-quarter of all businesses surveyed.
Over two-fifths, (42.5%) of businesses in the accommodation and food services industry expected maintaining a sufficient cash flow or managing their debt would be an obstacle. The foodservice industry (50.5%) also expected insufficient demand would be an obstacle for their business. They are not alone in this sentiment as the transportation and warehousing industry (37.2%), the mining, quarrying, and oil and gas industry (36.0%), the information and cultural industries (35.0%) and the wholesale trade industry (34.9%) all expected insufficient demand would be an upcoming obstacle for their respective industries.
Businesses fear government regulation interference
The report from Stat Canada’s The Daily titled the “Canadian Survey on Business Conditions, first quarter 2021” says that “in light of continuous reopening’s and shutdowns because of fluctuations in the number of COVID-19 cases during different waves, government regulations posed an expected obstacle for around two-fifths of businesses in arts, entertainment and recreation (43.6%) and accommodation and food services (38.1%).”
Doesn’t that give you the warm and fuzzies? Roughly 40% of all Canadian businesses surveyed fear government regulations will be an obstacle for their businesses in the next 3 months – this in addition to half of the businesses not knowing how much longer they can make it.
Why are businesses (roughly 40%) in a supposedly free and democratic nation worried about government intrusion (regulation) being an obstacle for them in the coming months? We should be ashamed that we’ve allowed the government to intrude this much into the lives of Canadians. We’ve allowed them to dictate who can sell and who can’t – did anyone consider the consequences to our economy and our future lives?
Did anyone consider that higher debt today leads to higher inflation on goods and higher taxes in the future? Did anyone consider that businesses that shut their doors can’t pay taxes? Did anyone consider that a loss in tax revenue could lead to cuts in public services – like healthcare?
Don’t believe me – check out the Government of Canada’s “Yesterday’s Gone report” where they admitted the debt could lead to cuts in services:
“The economic crisis brought on by COVID-19 has led to record levels of government debt. In Canada, the pre-pandemic combined federal and provincial debt totalled $1.4 trillion. This debt has rapidly grown, with governments borrowing another $300 billion so far in 2020. In the coming years, this could result in cuts to services across Canada potentially leading to a wave of privatization.”
How long can Canadian businesses continue to operate under these restrictions when half of them are asking themselves how much longer they operate under their current profit and expenditure levels?
Supply chain concerns
Around two-fifths of businesses surveyed in the wholesale trade (46.9%), manufacturing (44.2%), construction (42.2%) and retail trade (37.3%) industries expected supply chain issues to be an obstacle over the next three months.
That’s not exactly comforting – it’s the perfect storm. As businesses struggle with reduced demand, government regulations, and in general just to keep their doors open – roughly 40% of them expect that there will be supply chain issues in the coming months. If you can’t get parts – you can’t produce goods. If you can’t produce goods – you don’t make any money.
Over half of foodservice businesses can’t take on any more debt
Just take out another line of debt from big daddy government and continue to save grandma right – wrong. Over half of businesses in the foodservice sector stated they cannot take on more debt (52.7%). This means that not only are they losing income due to government regulations (indoor dining limits) – they can’t take out a line of credit to bankroll the bills anymore.
The reality is, many will likely face bankruptcy if they can’t operate at full capacity soon. The government knows that this industry is at risk and discussed it in their “Yesterday’s gone report” where they said, “It may become a struggle to attract talent to the hospitality, retail, and restaurant industries, possibly necessitating government incentives to participate in them.”
That’s right, the Government of Canada is already considering the possibility that they may need to offer government incentives to participate in the hospitality, retail, and restaurant industries – the same industries they helped destroy with their draconian Covid policies.
Nearly half (46.4%) of businesses did not know how long they could continue to operate at their current level of revenue and expenditures before considering laying off staff, while over one-fifth (21.3%) reported they could continue for less than 12 months.
Food, Art, entertainment and recreation all hit hard
A staggering 86.4% of businesses in food services and arts and 78.3% of those in the entertainment and recreation industry reported a decline in revenue in 2020 from a year earlier – not a surprise considering the government restrictions and regulations.
Perhaps more concerning is that three-fifths (61.5%) of businesses in the accommodation and food services and arts industry and 54.8% of those in the entertainment and recreation industry experienced a revenue loss of 30% or more year over year. Imagine losing roughly one-third of your paycheck year over year – and a lot of that has to do with government interference.
This economic climate we’ve allowed the government to create is toxic to business and it’s evident when reading the data. Three-Fifths (60.5%) of all businesses surveyed reported that revenues were done in 2020 from a year earlier and nearly one-third of those reported that their revenue fell by 30% or more. Imagine if one-third of all Canadians lost a third of their income – would we have so many Canadians applauding the lockdowns?
Saying it simply, we can’t afford to lockdown anymore -and we couldn’t afford it in the first place either. You can’t pay people to not do anything and expect debt and taxes not to rise. You can’t print money and expect everything to be fine – and this survey of businesses is a glimpse into that reality.
Many business owners are currently hanging on by a thread because of the power we’ve given politicians – all given out of fear. We can’t leave other Canadians out to lose everything they’ve worked years to build just to satisfy your need to have your fears quelled – that’s not how liberty, freedom and God-given rights work.
It’s time to wake up and smell the roses – not only do lockdowns not work, but they’ve also destroyed lives and livelihoods and perhaps the possibility of a strong economic future for Canada. How will we service the debt we’ve accumulated so we could lockdown? How will we create a competitive business market when the nation has a massive debt to address because of the lockdowns and general approach to Covid-19? It’s time to speak up Canada – your job may depend on it.
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