7.3.1 Impacts of Mandates on Small-/Medium-Sized Business

Introduction

The mandatory lockdowns of businesses had a devastating effect on small- and medium-sized privately owned businesses across Canada.

According to Statistics Canada, in 2020 there were 1.22 million employer businesses in Canada, and of these, 1.2 million or 97.9 per cent were small businesses (1 to 99 employees), and 22,725 were medium-sized businesses (100 to 499 employees).

https://ised-isde.canada.ca/site/sme-research-statistics/en/key-small-business-statistics/key-small-business-statistics-2021

In 2020, small businesses employed 7.7 million persons or 67.7 per cent of the private workforce in Canada, and medium businesses employed another 2.3 million persons or 20.6 per cent of the private workforce. So, together these two types of business employed 88.3 per cent of the entire private workforce in Canada.

Small- and medium-size businesses in Canada account for approximately 51.9 per cent of Canada‘s Gross Domestic Product that is generated by the private sector.

At the time of writing this report, Statistics Canada had included on their website “Key Small Business Statistics 2022“; however, many of the comparison graphs included in this “2022“ report had not been updated beyond 2019 statistics, and information updates were to December 2021. Updating these graphs to reflect the period of time during the pandemic is crucial to understanding what happened due to the mandates.

These figures from Statistics Canada highlight the critical nature of small- and medium-sized businesses in Canada.

Although the pandemic mandates had an effect on all businesses in Canada, the impact was particularly acute when it came to privately held small- to medium-sized business.

These small- and medium-sized businesses did not have access to the level of resources that were available to support the larger national and international businesses operating in Canada.

As privately funded entities, the majority of small- and medium-sized businesses lacked access to alternative sources of funding for their operations.

Shortages of supplies and materials were most keenly felt by these small- and medium-sized businesses as they did not have exclusive access to suppliers in the same manner that national or multinational businesses did. So many of them simply ran out of supplies.

Labour shortages were also keenly felt by the small- and medium-sized businesses as employees either stayed home or left the labour market due to early retirements or forced mandatory vaccinations.

Many workers who qualified for government assistance stayed home for the full duration of their benefits.

Businesses experienced additional costs due to new requirements for spacial separation, hygiene, and the restriction of facility occupancy.

The terror generated by the government reporting and the media created a toxic and fear-filled environment that caused many employees to fear coming to the workplace.

Small businesses, the backbone of the Canadian economy, were particularly vulnerable during the pandemic. Many were forced to close temporarily or permanently due to lockdown measures and reduced consumer spending. The impact of these closures on business owners, employees, and local communities has been profound.

Even businesses that managed to survive faced ongoing financial struggles, including rent payments, utility bills, and limited access to credit. The government implemented relief programs such as the Canada Emergency Business Account (CEBA) and the Canada Emergency Rent Subsidy (CERS) to provide financial assistance. However, the long-term viability of many small businesses remains uncertain, particularly in industries heavily impacted by ongoing restrictions and changing consumer behaviours.

Catherine Swift testified that many owners of the businesses that she represents reported significant negative impacts due to the various government “support“ programs. These effects included the fact that many employees stayed away from the workplace until such time that their CERB benefits ran out.

Tamara Ugolini testified how her small start-up business was destroyed due to COVID-19 mandates imposed by the government, resulting in discontinuation of operations and financial loss.

Testimony Concerning Impacts of Mandates on Small-/Medium-Size Business

Catherine Swift

President of the Coalition of Concerned Manufacturer‘s and Businesses of Canada; she reviewed the mandate effects on small- and medium-sized businesses.

(Toronto: March 30, 2023)

Douglas Allen

Economist; he provided an economic analysis of lockdown measures.

(Vancouver: May 4, 2023)

Chris Scott

Owner of a café; he described the effects of mandates on his business and community.

(Red Deer: April 28, 2023)

Joseph Bourgault

Owner of medium-sized manufacturing facility; he described the impact of mandates.

(Saskatoon: April 20, 2023)

Don Woodstock

Small security firm owner; he made interesting observations of mandates.

(Winnipeg: April 14, 2023)

Darrell Shelley

Business owner; he described the effects of COVID-19 mandates on his audio visual business.

(Truro: March 17, 2023)

Terry Lachapelle

Equipment operator; he lost retirement income due to lockdowns.

(Truro: March 17, 2023)

Peter Van Caulert

Small business owner; he reported on the effects of mandates on his training business.

(Truro: March 17, 2023)

Jamie Paquin

Owner of wine business; he related the effects of mandates and a comparison to Japan‘s mandates.

(Toronto: March 30, 2023)

Tamara Ugolini

Family hydrovac business; she described how they were bankrupted by COVID mandates.

(Toronto: March 31, 2023)

Catarina Burguete

Owner of family brewery and bar; she reported their bar closed due to mandates.

(Toronto: April 1, 2023)

Shea Richie

Restaurant owner; he described the impact of public health measures on his business.

(Winnipeg: Thursday, April 13)

Rick Wall

Owner of trucking company; he described the effects of lockdowns on trucking.

(Winnipeg: April 14, 2023)

Bryan Baraniski

Owner of hotel and restaurant; he recounted the impact of public health measures on business.

(Saskatoon: April 20, 2023)

Zoey Jebb

New business owner with loan from Business Development Bank of Canada in 2019; she ended her business in bankruptcy due to mandates.

(Saskatoon: April 22, 2023)

Louise Wilson

Owner of Dollar Store; she related the impact of mask mandates.

(Saskatoon: April 22, 2023)

Michele Tournier

Owner of chuck wagon racing business; he described the impact of COVID measures on business.

(Saskatoon: April 22, 2023)

Sunje Petersen

Family-owned tourism business in Yukon Territory; she recounted the impact of lockdown measures on her business.

(Red Deer: April 26, 2023)

Tracy Walker

Hairstylist from home; she described the public health surveillance of her business due to COVID measures.

(Red Deer: April 26, 2023)

Colin Murphy

Music and sporting events planner; his business closed for long periods due to mandates.

(Red Deer: April 26, 2023)

Sherry Strong

Author; she had to close her public speaking business due to mandates.

(Red Deer: April 26, 2023)

Drue Taylor

Massage therapy clinic owner; she no longer works due to an alleged COVID vaccine injury.

(Red Deer: April 27, 2023)

Conclusions

COVID-19 lockdowns have dealt a severe blow to small businesses in Canada. Many were forced to temporarily close their doors or operate with limited capacity, resulting in significant revenue losses.

The sudden decline in consumer spending and reduced foot traffic had a direct impact on sales, leading to financial hardships, layoffs, and, in some cases, permanent closures. Small businesses often lack the financial reserves or access to credit to weather extended periods of reduced or halted operations.

Small businesses are a significant source of employment in Canada, contributing to local economies and providing livelihoods for numerous individuals. The lockdown measures have led to widespread job losses, with many small businesses unable to sustain their workforce during prolonged closures. Unemployment rates have risen, exacerbating financial insecurity for individuals and families, while reducing overall consumer spending power.

Lockdowns and restrictions have disrupted supply chains, affecting small businesses‘ ability to source necessary goods and materials. Import delays, transportation disruptions, and shortages have further strained small businesses already grappling with reduced revenues. These challenges have hindered their ability to maintain consistent inventory levels, meet customer demands, and operate efficiently.

The impact of COVID-19 lockdowns extends beyond economic repercussions. Small business owners and employees often experience heightened levels of stress, anxiety, and uncertainty. The constant fear of financial instability, the burden of making difficult decisions, and the social isolation associated with lockdown measures can have detrimental effects on mental health and overall wellbeing.

While the Canadian government has implemented various support programs for businesses, including financial aid and wage subsidies, small businesses have faced challenges accessing these resources. Eligibility criteria, application processes, and delays in disbursement have created barriers for many small businesses, leaving them without the necessary financial lifeline to navigate the crisis effectively.

Certain sectors, such as hospitality, tourism, and retail, have been particularly hard hit by COVID-19 lockdowns. These industries heavily rely on in-person interactions and foot traffic, making it difficult to adapt to the restrictions and generate revenue through alternative means. Small businesses within these sectors face unique challenges and require tailored support to survive the economic downturn.

The detrimental effects of COVID-19 lockdowns on small businesses in Canada are significant and multi-faceted. The economic consequences, including revenue losses, job cuts, and supply chain disruptions, have left many small businesses on the brink of closure.

The toll on mental health and wellbeing further compounds the challenges faced by business owners and employees.

As the nation begins to understand the underlying motivation and failure of governments‘ actions during the pandemic, it is crucial to recognize the importance of small businesses and the devastating impact governments‘ actions had on them. Targeted support to mitigate the losses caused by governments‘ draconian and misguided measures is required.

By prioritizing the needs of small businesses and fostering an environment of resilience and recovery, Canada can work towards rebuilding its economy and ensuring the long-term viability of its small business sector.

Recommendations

A.  Financial Support:

• Simplify and expedite access to financial assistance programs, ensuring that small businesses can easily navigate the application processes.

• Provide targeted financial aid to sectors that have been disproportionately affected.

• Extend and expand wage subsidies to encourage businesses to retain employees and minimize layoffs.

B.  Flexible Regulations:

• Implement flexible regulations and licensing requirements to support businesses in adapting to changing circumstances and exploring new revenue streams.

• Streamline bureaucratic processes to reduce administrative burdens on small businesses and expedite approvals.

• In cases where governing authorities decided businesses were non-essential, there needs to be accommodation made to allow these businesses to reestablish themselves or in cases where the business has closed, gone bankrupt, et cetera, an understanding within the public service that this is not a consequence of the business owner not wanting to work but a direct result of decisions made by governing authorities.

C.  Access to Capital and Credit:

• Enhance access to affordable capital and credit for small businesses through low-interest loans, loan guarantees, or grant programs.

• Collaborate with financial institutions to develop tailored financial products specifically designed to address the needs of small businesses during recovery.

D.  Promote Local Online Shopping:

• Encourage consumers to support local businesses by promoting the importance of shopping locally.

• Develop and implement marketing campaigns to raise awareness of online platforms and e-commerce solutions that facilitate purchases from local businesses.

E.  Training and Skill Development:

• Offer training programs and workshops to small business owners and employees to enhance their skills in areas such as digital marketing, e-commerce, and remote work.

• Collaborate with educational institutions and industry associations to develop training initiatives specifically tailored to the needs of small businesses.

F.  Collaboration and Networking:

• Facilitate networking opportunities among small business owners, allowing them to share experiences, insights, and best practices.

• Foster collaboration between small businesses and larger corporations through partnerships, supplier diversity initiatives, or mentorship programs.