RBC releases five-point plan to help ‘small business make big pivot’ to a post-pandemic economy
TORONTO, June 11, 2020 /CNW/ – A five-point plan to help Canadian small businesses thrive in a post-pandemic economy was released by RBC today.
The report includes proprietary economic research and analysis from a survey of small businesses, which generated 22,000 responses. It cites two core challenges facing the country’s million plus small business, which is defined as companies with a maximum of 100 employees. The sector is reeling from the economic lockdown. It recorded almost double the rate of job losses as mid-sized and large firms during the first two months of the global pandemic. Women and youth bore more of the pain, since they are over-represented in small-business employment.
The health crisis has also created new economic trends and is accelerating others, which requires “small business to make a big pivot” into a more virtual, local and fragmented operating environment. For instance, approximately one-third of Canadians are shopping online for goods and services they normally would have bought in a store. Yet many small businesses remain “digital novices.” Statistics Canada has noted a significant number of small firms are without a website, or the ability to facilitate online payments.
“The scars of an unprecedented recession are already visible on every Main Street in Canada, but the impact extends well beyond mom-and-pop shops or the retail sector,” said Dawn Desjardins, Vice-President and Deputy Chief Economist, RBC. “In many ways, small businesses are the Canadian economy, representing more than 40 per cent of GDP, and close to 60 per cent of new jobs prior to the health crisis. We cannot expect a full economic recovery without a small business rebound.” As such, policymakers must help craft strategies to help small businesses remain solvent and exit stronger from the recovery. The report notes that preparing for the longer-term may seem out of sync with the immediate challenges of survival. But to be unprepared for a very different kind of recovery could be just as costly as the unprecedented collapse.
“Small firms will need to seize on new technologies and permanently altered consumer preferences to attack markets and build brands in entirely new ways,” says John Stackhouse, Senior Vice-President, RBC. “While resilience will be important, adaptability will be critical.”
Prospering in a post-pandemic economy
RBC has encouraged leaders in the public and private sector to adopt a five-point plan. The overarching principles are as follows:
- Streamline relief programs for the recovery: Ottawa has committed a historic amount to small business through the crisis, and a range of programs is helping many stay afloat. But some of the programs are too complicated or too dependent on debt instruments. As we shift from relief to recovery, and then to a slow rebuild, the federal government has an opportunity to refresh and streamline those relief efforts.
- Invest in capacity to reopen safely: Every enterprise will be challenged to reopen. Many smaller ones will be doubly challenged because they don’t have the experience or expertise to operate in a transformed economy and work environment. Provincial governments, which have been more focused on public health than private enterprise, can help both by investing in broad-based programs to assist employers as they try to get back to business.
- Create new networks for a massive digital push: The pandemic has led to a big increase in cross-border data flows, and a greater concentration of power among global platforms that are helping consumers search, share and shop from a distance. Canadian enterprises need to pivot to this growing reality.
- Implement new economic strategies to scale small business: Small firms will not only need tools for the post-pandemic economy; they’ll need to form alliances—the equivalent of digital coop movements to compete in the global platform economy. That’s just one imperative in a transformed economy that will be more fragmented, more localized and more challenging for smaller enterprises. Scale will matter more than ever, to drive efficiencies for consumers who may want local for less. As governments and large enterprises contemplate a recovery, they may have the opportunity to create Canadian alliances for procurement and supply chains that will strengthen the economy and communities across the country.
- Adopt a more strategic approach to globalization: The pandemic upended supply chains and shone a spotlight on some of the unintended consequences of globalization. Some small firms rose to the challenge, retooling to produce critical products like masks and ventilators. Their response highlighted the capacity of Canada’s manufacturing sector to pivot and innovate quickly. Small firms will need to do a lot more of that, and not just for the domestic market. In a world that is likely to be more fragmented, and perhaps less welcoming to foreign firms, Canada will need a more focused approach to trade.
Stackhouse said: “During the global financial crisis, policymakers worried about ‘too big to fail, as they protected systemically important banks and insurers, and shored up supply-chain foundations like auto companies. This time around, the emerging policy motto needs to be ‘too small to fail,’ as small business will be relied on to restore local demand and job creation across the country and economy.”