Many Canadian small businesses weren't ready to withstand the economic onslaught that COVID-19 brought in mid-March.
A late-April survey of RBC small business clients found that two-thirds of them had lost at least half of their revenue and nine out of 10 didn’t know what the future is going to hold.
And analysis from a new RBC Thought Leadership report, Small Business, Big Pivot, found that small firms have seen almost double the rate of job losses as mid-sized and large firms.
The country’s small businesses – who contribute 42% to GDP – will be critical to Canada’s recovery, and yet according to the Business Development Bank of Canada, more than half of them lack the digital savvy to thrive in the world we are living in now.
Lori Darlington, RBC’s Vice-President of Small Business and Strategic Partnerships, is attuned to the enormous pressures small firms are feeling. She also believes that entrepreneurs have superpowers up their sleeves – confidence and conviction – to help them not only survive, but thrive. Darlington, along with four small business owners, joined the RBC Disruptors podcast to share how small businesses are transforming for the virtual economy.
“Something that has just continued to amaze me through the crisis is the creativity and the innovation that we’ve seen,” Darlington said.
One example is Knix, an undergarment company whose Toronto-based founder Joanna Griffiths used the lockdown to double-down on digital. Knix created virtual fitting sessions and “took a bit of a gamble” by bringing its annual warehouse sale online.
“We sold more in 60 minutes than we did in all of Black Friday of last year, which was historically our bestselling day as a company,” Griffiths said.
“For me, it just really speaks to the power of e-commerce.”
It’s why Shopify briefly became Canada’s most valuable company.
Ice cream is perhaps an unlikely e-commerce business, but Winnipeg’s Chaeban Ice Cream went for it anyway. Joe Chaeban and his partners launched a subscription service using the Shopify platform, where customers order pints right to their door.
“We went from potentially going bankrupt to now having a sustainable company,” he said, adding that the federal wage subsidy has also helped. “It’s going to be very hard getting customers into your store. Somehow, we have to get to them.”
So, how can small business owners and entrepreneurs adapt? Here are five takeaways.
1. Lead with digital.
The COVID pandemic has accelerated digital adoption, especially among consumers who remain hesitant to leave their homes. Online isn’t just another channel to reach customers, but can also offer added benefits of personalized experiences and cost efficiencies.
“It’s never been easier to bring your business online,” Darlington said. “There’s so many turnkey solutions out there to help small businesses get online more easily than it would have ever been in the past.”
2. Rethink the customer experience.If your business depends on face-to-face interactions with customers, you could still create that experience, even without a storefront, like what Calgary entrepreneur Denise Kruger has done. She’s been showcasing clothing items from her resale business, Style Encore, on Facebook Live.
“I actually felt like I was on the Shopping Network and I would just say what the item was and speak to the customers, and some people would say it was their little guilty pleasure,” she said.
3. Plan for different scenarios.
Owners need to understand what their financials are going to look like as they start to reopen, said Darlington, especially as so many fundamentals of how they run their businesses will change. What will you require if you’re allowed to open at 50% capacity, for example? Will you have enough customers to break-even?
4. Communicate not only with your customers, but your employees. And often.
To mitigate uncertainty and build the trust that is necessary to survive the crisis, businesses need to keep their stakeholders informed about what’s going on. Ensure that customers and employees feel safe about coming back to your company.
5. Go global.
You can go global without leaving your home. The powerful thing about digital is that businesses can reach so many more customers and easily extend beyond their neighbourhoods.
Take Sareena Nikolai, who said that the COVID crisis has been a “blessing in disguise” for her Vernon, B.C.-based fitness business, Soul Studio. It’s offered hundreds of livestreamed classes since March, and has since gained members from Australia and Brazil. Now, Nikolai is creating an experience to allow her online members to join her in-studio class – connecting the physical and virtual worlds together.
As tough as things are, there will be opportunities in the months and years ahead for entrepreneurs who focus on new ways to pivot their businesses. It’s not going to be an easy time. But for many, it’s also the exact right time to be looking for change.
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.
As Senior Vice-President, Office of the CEO, John advises the executive leadership on emerging trends in Canada’s economy, providing insights grounded in his travels across the country and around the world. His work focuses on technological change and innovation, examining how to successfully navigate the new economy so more people can thrive in the age of disruption. Prior to joining RBC, John spent nearly 25 years at the Globe and Mail, where he served as editor-in-chief, editor of Report on Business, and a foreign correspondent in New Delhi, India. He is the author of three books and has a fourth underway.
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.