Small business owners balance rising costs with keeping customers happy: survey

Almost a third of Canadian small business owners raised prices by more than 10 per cent in 2022 to offset rising costs, a survey found — and the trend is continuing this year.

The survey by Ownr, a small business and legal management platform backed and operated by RBCx, found that so far in 2023, more than 23 per cent of small business owners have raised prices by more than 10 per cent.

“The two major concerns for entrepreneurs right now are both cash flow issues and then the backdrop of inflation,” said Derek Hopfner, chief revenue officer at Ownr.

Inflation has been moderating from last year’s highs, but remains elevated, with a reading of 4.3 per cent in March. Meanwhile, the Bank of Canada is holding interest rates high in its bid to fight inflation.

Some of the other pressures most acutely facing small firms right now are labour supply and cost, borrowing costs and supply chain issues, according to the Canadian Federation of Independent Business’ monthly Business Barometer index report.

Though it’s a difficult decision for a small-business owner to make, Hopfner said eventually entrepreneurs have to translate those concerns into higher prices.

“There is this kind of balance between what makes sense from a margin perspective as a business owner, and then making sure that you’re able to attract customers as well,” he said.

Hopfner said he’s seeing more people start businesses as a reaction to economic uncertainty so they can make additional income.

“It’s really interesting to see both if you’re operating the business already, how you react to (inflation), but what you might do if you’re not operating a business yet, and how you might choose entrepreneurship as a path for supplementary income,” he said.

Almost a quarter of the small business owners surveyed said they started their business as a way to make additional revenue, a number Ownr said is increasing from previous surveys.

Natasha Acuba-Bailey is one of many entrepreneurs whose side hustle has turned into their full-time job. Acuba-Bailey launched Burnaby, B.C.-based Telly’s Manila Kitchen in 2020, selling jarred adobo flakes, a Filipino food, featuring her grandmother’s recipe.

At the beginning of 2022, Acuba-Bailey decided to leave her job in retail and make Telly’s her main gig.

Since she took that leap, inflation has soared, sending the costs of materials and raw ingredients up with it. For example, she said the cost

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Unleash small business by exempting them from corporate taxes

We’ve got to stop stifling our entrepreneurs by taxing them into the ground and making them jump through countless bureaucratic hoops

Published May 02, 2023  •  Last updated 2 days ago  •  3 minute read

Small businesses are often described as the backbone of our economy — and that’s because they are. They develop new products and technologies that drive economic growth and create new jobs. But if small businesses are so important, why aren’t we doing more to support their success and foster even greater growth?

Small businesses bore the brunt of the economic fallout during the pandemic. The on-again, off-again lockdowns dried up revenue, drove away customers and made employee retention very difficult. I often wonder how many of the small businesses that went under during the pandemic could have become another Magna International?

Legendary entrepreneur Richard Branson famously said that all big businesses start small. When I started Magna, I opened up a one-man shop in a rented garage at the corner of Dufferin and Dupont streets in Toronto. I bought

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New money laundering rules hurt small business

As if the impact of the pandemic, high inflation, high interest rates and supply chain shortages weren’t enough of a drag, the Trudeau government has jumped in with a thick new layer of red tape that will hold small businesses back all across the country.

Here’s the deal. When businesses across the country set up shop and start a new relationship with a bank, they have to go through a long and detailed screening process for the sake of preventing money laundering.

Until very recently, payroll software programs like Quickbooks and FreshBooks could deposit payroll funds into a business’s account and then, in turn, pay the business’s employees through that account without having to go through an additional anti-money laundering screening process. That’s because the business already goes through those protocols upon opening its account with the bank. But the federal government decided to change that. New regulations, which were written up in a rush to clamp down on crowdfunding, will force payroll software companies like Quickbooks and FreshBooks to ensure that the anti-money laundering process occurs twice: once when a business sets up its account with a bank, and a second time before payroll funds are deposited into a business’s account to pay employees.

While the federal government claims it’s all about preventing money laundering, in reality this is government regulation gone wild. These new rules simply duplicate the anti-money laundering process, leading to more paperwork, more working hours lost to red tape and frustration for mom and pop shop owners all across the country. This change does nothing more than hold small businesses back.

The new rules also represent a barrier to the creation of new small businesses. All of this new red tape could mean businesses can’t get off the ground. Some might even choose to operate in cash just to avoid a boatload of complicated and needless regulations. And even if new small businesses do want to go through all this hassle, the cost of using payroll software will soar, as adding burdensome anti-money laundering protocols will force payroll companies to increase prices.

Small businesses are being hammered with needless new regulations at exactly the wrong time. Some are just starting to get off their feet after the pandemic. No less than 740,000 jobs were lost among small businesses thanks to the pandemic and related lockdowns and closures. Some businesses are gone forever, and others are

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Small business groups push for extension to repay outstanding CEBA loans

A hand painted sign about the Canada Emergency Business Account is seen in the front window of Frances Watson, a store on Queen St. West, on April 15, 2020.Fred Lum/the Globe and Mail

Small-business groups are asking the federal government to further extend the deadline for repaying Canada Emergency Business Account loans when the budget is tabled later this month, as few of the loans have been paid back.

Ottawa announced the creation of the CEBA program on April 9, 2020, and sent more than $49-billion to almost 900,000 businesses. It was the first and most widely used pandemic support program for businesses.

The original repayment deadline for the interest-free, partially forgivable loans was Dec. 31, 2022; after that, businesses would start paying interest and forfeit the forgivable portion of the loans. Last year, citing the challenges posed by the Omicron variant, Ottawa extended the deadline by 12 months.

But almost three years after the program began, most of the loans are still outstanding. Export Development Canada, the Crown corporation that oversees CEBA, told The Globe and Mail that just 13 per cent, representing $5.7-billion, were repaid as of the end of November, 2022. EDC first provided these figures to CBC.

The reason: Many of those businesses are still struggling with debt incurred during the pandemic, business groups say.

Olivier Bourbeau, Restaurants Canada’s vice-president of Quebec and federal affairs, said his association recently surveyed its members and found that 20 per cent of those who had not yet repaid their CEBA loans were not sure they ever could. About 30 per cent of its members reported having pandemic-related debt of more than $100,000.

Data from the Office of the Superintendent of Bankruptcy show there were 533 insolvencies in the accommodation and food-services sector in the 12 months ending Jan. 31, up from 377 in the prior 12 months – an increase of 41 per cent.

Under the current rules, CEBA loans are worth either $40,000 or $60,000 and are interest-free and partly forgivable ($10,000 for the smaller loans, $20,000 for the larger ones) if the balance is repaid by Dec. 31, 2023. After that, the forgivable portion is forfeited, interest begins to accrue at a 5-per-cent rate, and the loan goes to collections if not repaid in full by Dec. 31, 2025.

Restaurants Canada has proposed the government phase out the loan forgiveness over six-month periods, so that

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Owners of small businesses say they feel left out of B.C.’s budget

When Alper Tasdurmaz opened his Turkish-style bakery in Vancouver’s Kitsilano neighbourhood in 2018, business was good. So good, in fact, he was able to open another location along Broadway.

But a series of unfortunate events followed: the COVID-19 pandemic, rapidly rising costs associated with running a business, and the construction in front of his second shop have created significant challenges.

That’s why he and many other small business owners were disappointed when B.C.’s budget came out on Tuesday. 

“All the budget goes to some other places but not any part of it to the small and medium business,” he said. “It was really frustrating.”

Chris Jones, who owns and operates two restaurants in Victoria, B.C., says he, like Tasdurmaz, would have liked to see something in the budget offering relief to businesses that are still recovering from pandemic losses while simultaneously experiencing increased costs. 

He said food prices are up 11.4 per cent and passing that cost on to customers wouldn’t work. 

“There’s going to be a threshold of sticker shock for our consumer where 11.4 per cent on a $17 plate of food is $2,” he told On The Island host Gregor Craigie. “Increasing our menu prices $2 per year is not sustainable.”

The budget focused heavily on rebates and tax credits to address affordability for individuals and families.

But, Tasmaduraz says, he pays taxes too, and his business is his livelihood. 

“We are helping the economy too in B.C., but we cannot get any supports from the local government.”

Increased carbon tax a particular concern

Greater Langley Chamber of Commerce CEO Cory Redekop says the chamber had previously asked the province for help lowering the costs associated with doing business in B.C. 

“The rising costs we are all seeing in our personal lives are also hitting our small businesses, and making it harder and harder to for them to succeed,” Redekop said in a press release.

“This budget missed an opportunity to underpin B.C. small businesses as they head into a time of economic headwinds.”

Of particular concern, according to the B.C. Chamber of Commerce, was the increased carbon tax.

Beginning April 1, the carbon tax will increase by $15 per tonne annually, until it hits $170 in 2030. This applies to the purchase and use of fossil fuels — which Chamber of Commerce President and CEO Fiona Famulak said will hit small businesses hard. 

“This is going

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