Scotiabank encourages small and medium
businesses to invest in innovation and technology as interest rates
rise
TORONTO, May 26, 2022
/CNW/ - Canadian Small and Medium-Sized Enterprises (SMEs) should
consider investing in innovations and technology before interest
rates increase even higher, according to the latest report from
Scotiabank.
Scotiabank's latest small business trend report, SMEs: The
Shortage Economy sheds light on Canada's economic forecast and what that could
mean for Canadian business owners in the coming months and years.
The report indicates that business owners now expect supply chain
disruptions to continue to worsen for at least the next six months,
exacerbated by geopolitical events such as the war in Ukraine. These obstacles are having a
significant impact on many SMEs' business operations and
opportunities for growth.
In addition to these broad market challenges, the cost of
borrowing will rise through 2023, with the Bank of Canada expected to continue to raise interest
rates. While the Canadian business community began to express
optimism as the pandemic waned, these various financial
strains could impact SMEs that currently point to limited financial
resources as factors constraining business development through the
adoption of new technologies, such as e-commerce solutions.
The advice for SMEs to invest in innovation now extends earlier
analysis from Scotiabank's most recent Path to Impact
Report which found that businesses that invested in
their digital capabilities were better positioned to withstand
economic challenges.
Key Findings from the SMEs: The
Shortage Economy report includes:
- SMEs have underperformed larger enterprises in the
post-pandemic recovery. Since the start of the pandemic, 1/3 of
firms now consider a shortage of input products to be a
limiting factor for raising production.
- Canada has seen the number of
unfilled job vacancies reach historic levels during the
post-pandemic recovery. Many positions remain unfilled from
workers who left industries affected by lockdowns, the inability to
hire workers as quickly as they were laid off during the pandemic,
and overall exodus from some industries where virus exposure was
elevated.
- Businesses consider the shortage of labour as an important
limiting factor to revenue growth and smaller firms expect to
raise wages more on average, compared to larger firms.
- Growth in Canada's overall GDP
is expected to average 4.3% in 2022 and 3.2% in 2023,
with unemployment falling through 2022.
"Taking a proactive approach to investing in your own business -
now rather than later - will ensure it's more resilient, as you
adapt to a higher cost future and capitalize on changing consumer
behaviour," said Jason Charlebois,
Scotiabank's Senior Vice President of Small Business
Banking. "Canadian business owners can rest assured
knowing that they can speak with a Scotiabank Small Business
Advisor on financing options and how to best weather future
economic headwinds."
As Canadian business owners plan their operational strategies
for the year ahead, Scotiabank recommends five key areas for
recovery and growth:
- Plan your Liquidity and Cash Flow: Begin scenario
planning for 6-12 months ahead, amid rising interest rates and
supply chain disruptions. Evaluate your cash flow, employee
requirements, inventory, and variable and fixed expenses. Review
and consider securing required capital to head off potential rate
hikes.
- Dive into Digital: Take advantage of the many tools and
resources available to help your business grow its digital
capabilities. Explore opportunities for your business to
incorporate online innovation, and investigate ways to process
customer payments faster, such as Scotiabank's Interac† for
business. As your circumstances fluctuate, having agile operating
processes can help you adapt quickly with changing conditions.
- Continually monitor the economic environment: Interest
rates can rise overnight. It is important that business owners keep
a close eye on external factors that can impact their business.
This way, risks and opportunities are proactively identified so
businesses can pivot and improve their resiliency.
- Lean on your financial A-Team: Now is the time to reach
out to your Small Business Advisor. Scotiabank has a vast network
of experienced professionals who have supported thousands of
businesses throughout challenging periods. Our team offers
specialized solutions to help you manage risks, capitalize on new
opportunities, and plan for your future – we are here to guide and
support you throughout your journey with strategies from recovery
to growth.
Visit the Scotiabank Advice+ Centre for Business for more
details:
https://www.scotiabank.com/ca/en/small-business/advice-centre.html
To read the full report SMEs: The Shortage Economy
report, please click here.
† Interac is a registered trademark
of Interac Corp. Used under licence.
About Scotiabank:
Scotiabank is a leading bank in the Americas. Guided by our
purpose: "for every future", we help our customers, their families
and their communities achieve success through a broad range of
advice, products, and services, including personal and commercial
banking, wealth management and private banking, corporate and
investment banking, and capital markets. With a team of over 90,000
employees and assets of approximately $1.3
trillion (as of April 30,
2022), Scotiabank trades on the Toronto Stock Exchange (TSX:
BNS) and New York Stock Exchange (NYSE: BNS). For more information,
please visit http://www.scotiabank.com and follow us on Twitter
@ScotiabankViews.
SOURCE Scotiabank