Canadian small business owners must take rapid action to protect their own interests, as new data from Xero reveals a widening gap between small business sales in the US and Canada, and a major disconnect in overall mood.
Small business sales in Canada dropped more than two percent during the September quarter 2024, while south of the border, small business sales were up nearly one percent, according to the latest Xero Small Business Insights (XSBI) report.
“Navigating turbulent times requires more than just focusing on your own business; it requires becoming an agent of change.”
The state of national economies is also reflected in general sentiment.
The National Federation of Independent Businesses’ Small Business Optimism Index in the US reached its highest point since 2018, while the Canadian Federation of Independent Businesses’ (CFIB) Business Barometer shows a decline in confidence.
The Canadian economy is facing a unique set of challenges and it’s hitting small businesses especially hard. Amid growing economic uncertainty, I’ve outlined some practical steps Canadian small business owners can take—focusing on what they can actually control to stay resilient.
Create a detailed cash flow forecast
To start, Canadian small businesses must work to project their income and expenses and identify potential shortfalls so they can effectively weather a prolonged period of uncertainty.
In today’s challenging economic climate, strong cash flow is essential for small business survival. To combat rising costs and payment delays, automating invoice collection is no longer a luxury, but a necessity. Technology can handle the bulk of this process, freeing owners to focus on what truly matters: growing their business and nurturing customer relationships.
Nearly five years after the pandemic’s initial shock, small businesses face a distinctly different, yet equally challenging, economic uncertainty. While the pandemic brought immediate disruptions, the current struggle is marked by the lingering effects of those disruptions, paired with shifting financial pressures.
This reality is echoed by Xero customers like Duco Media.
“While many industries suffered immediate consequences in 2020, digital businesses like ours saw strong growth during the early pandemic years. The real downturn hit us in late 2022, when government support ended, loans needed to be repaid, and businesses were forced to cut back,” shared Emrah Eren, Founder of Duco Media.
Duco Media tackled the economic slowdown through fundamental strategies: optimizing cash flow, flexible payments, and lean hiring.
Invest in technology
Studies consistently highlight lagging technology adoption as a key barrier to productivity gains for Canadian businesses. Xero’s 2021 research identified this reluctance as a significant challenge, but also a major opportunity for small business growth.
Technology adoption has played a huge role in how small businesses navigated the last 18 months. Some used their tech to stay connected to their team and customers, while others found digital solutions to be the difference between closing their doors and maintaining a regular income.
For example, during lockdowns, cloud-based solutions and other digital channels were critical in helping many businesses stay operational even when physical access was restricted. To put this into perspective, in the US alone, e-commerce adoption in the first half of 2020 was equal to that of the previous decade.
To capitalize on these opportunities, businesses should focus on technology adoption in critical areas such as marketing, sales, finance, workforce management, compliance, supply chain, and HR, as outlined in a 2020 Xero and Forrester report.
Stay informed to become a force of change
Navigating turbulent times requires more than just focusing on your own business; it requires becoming an agent of change. Small business owners have a unique opportunity to shape their communities.
At Xero, we believe the key to business success is empowerment—that requires keeping up-to-date on economic trends and government policies. Stay informed and channel your energy into advocating for policies that support small business growth. Work with your local Chamber of Commerce, industry associations, or small business groups to amplify your impact.
By focusing on these fundamentals and actively participating in shaping a better business environment, small businesses can play an outsized role in creating a more vibrant and supportive business ecosystem.
Ben Richmond is Managing Director, North America at Xero.
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Feature image courtesy of Xero / BetaKit.
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Xero Small Business Insights report shows sales are continuing to decline, and action is required.
The post Three things Canadian small businesses can do instead of spiralling first appeared on BetaKit.
