“Too big to fail" was the guiding principle for policymakers as they shored up systemically important banks, insurers and supply chains during the 2008-2009 global financial crisis.

As Canada navigates an urgent route through the current COVID 19 pandemic, the emerging policy motto must be “too small to fail.”

The small enterprises that are crucial to the Canadian economy – representing 42% of GDP and 48% of new jobs – are also those at greatest danger in this unique recession. Tending to be “digital novices” –a significant number are without a website, or the ability to facilitate online payments – small firms were ill-prepared for the rapid economic shift that has emerged in the pandemic’s wake, an abrupt lurch to a virtual marketplace that has caught many off guard.

This crisis may be the moment for these companies to reboot and reposition themselves for a new economy that will be more digital, more virtual and more mobile than anything we’ve seen.

The ability of our nation of small businesses – the local barber shops, health food stores, software startups and greenhouse operations – to pivot to this new reality will be critical to Canada’s overall recovery.

In short, Canada’s rebuild depends on small business’s rebound.

In a new report from RBC Thought Leadership, Small Business, Big Pivot, we lay out a five-part plan to help Canadian small businesses thrive in a post-pandemic economy.

Read the full report and recommendations


What we found:

  • Small firms have recorded almost double the rate of job losses as mid-sized and large firms.
  • Small firms in five sectors—accommodation and food services; arts and entertainment; non-essential retail; mining and oil & gas services; commercial real estate leasing—are most vulnerable; potentially affecting 1.2 million workers.
  • Small firms in sectors like technology, wholesale trade and administrative services face a relatively lower risk; their fixed-cost burden is lighter and they can deliver products and services with little to no physical contact.
  • Women and youth face the greater job risk from small-business woes; they’ve suffered outsized employment declines already.
  • We expect GDP in some of our hardest-hit sectors to remain around 25-50% below February levels at the end of the year, even as the recovery takes hold.
  • The pandemic is creating new economic trends and accelerating others, offering roadmap for an altered economy: more digital delivery; more domestic procurement; less market concentration; more consumer caution.

Charting a course out of the pandemic won’t be as easy as flicking a digital switch, nor can it mean a reversion to practices that worked in the past.

Fiscal support and a rebound in consumer spending will ensure an overall recovery. But its scale and speed will depend on how small firms reimagine themselves to confront the challenges and opportunities of the post-pandemic business landscape.

Here’s how the country can help:

1. Streamline relief programs. As we shift to a recovery, the government has an opportunity to refresh and streamline its business relief programs. Most immediately, those options could include:

  • a topped up Canada Emergency Business Account (CEBA) and modified Business Credit Availability Program (BCAP) with greater forgiveness to cover a protracted recovery and help owners retrofit facilities for social distancing
  • changing the Canada Emergency Response Benefit (CERB) to allow for a sliding scale to be paid to those going back on payroll;
  • offering a brief tax holiday for small businesses to spur the recovery of local shopping and tourism.

2. Invest in capacity for safe reopening. Provincial governments should consider investing in broad-based programs to help employers restart their businesses. These could include:

  • a nationally-coordinated program to certify public-facing facilities as COVID-safe;
  • provincially-led and funded coalitions of business groups and chambers to provide personal protective equipment to small companies;
  • an initiative to remotely connect students with small businesses to help them gain work skills and mentorship opportunities.

3. Build digital networks. Small firms will not only need tools for a post-pandemic economy, they’ll need to form alliances to compete in the global platform economy. A recovery plan needs to incorporate a digital strategy that could include:

  • tax credits for small firms to invest in Canadian designed software and hardware to enable digital growth;
  • a national program to create virtual farmers’ markets and virtual Main Streets;
  • an acceleration of the Budget 2019 commitment to provide high-speed Internet to every Canadian and business by 2030.

4. Set new economic strategies to help scale. Governments and large enterprises have an opportunity to invest in sectors that leverage Canadian supply chains and fuel small business growth including:

  • coordinated procurement efforts to designate preferred small business suppliers with a special focus on PPE, testing and tracking technologies and health care;
  • Canada 2020-21 tourism campaign to spur domestic travel;
  • a renewed provincial commitment to lower interprovincial trade barriers for small firms in 2021.

5.Create a more strategic approach to globalization. In a world that is likely to be more fragmented, Canada will need a more focused approach to trade. We may need:

  • a “Go Global” program using trade accelerators to boost exports to countries more open to Canadian goods;
  • a coalition of governments, banks and other institutions to form a “Brand Canada” platform for small firms;
  • expanded expat networks to connect knowledge-based industries with global Canadians.


To learn more about how small businesses are transforming for the virtual economy, listen to our podcast episode.


This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.