Waiter packing up cafe or restaurant chairs
Small business

3 months later: how the pandemic is impacting Canadian businesses

Decreased revenue has some companies gathering debt to stay afloat. Some owners are calling for further or revised government relief

Waiter packing up cafe or restaurant chairsEven with easing restrictions, it will be a long road back for Canadian businesses, particularly in the hospitality sector (Getty Images/The Photo Commune)

Nearly three months since provincial governments ordered the closing of non-essential businesses in an attempt to slow the spread of COVID-19, many, particularly small businesses, are struggling with large drops in revenue.

The Canadian Federation of Independent Business (CFIB) has been tracking the state of small businesses throughout the pandemic. The most recent survey, based on a sample of more than 4,000 businesses, found 40 per cent of respondents have seen revenues drop 70 per cent or more, while 70 per cent have seen revenues drop by at least 30 per cent.

“Many people do like patronizing small firms with unique products and services,” says Ted Mallett, CFIB’s vice-president and chief economist. “It’s much more difficult for them to be operating these days.” 

Small firms will come back, he says, but there’s uncertainty whether some existing small businesses will be able to survive this.


While provinces and regions have already begun easing restrictions, allowing a full or partial reopening of most businesses, it will be a long road back—especially for the hardest-hit sectors, such as hospitality and entertainment.

“With restaurants, they were cut back to zero. Now they have 50 per cent capacity. Their profit margin is three to five per cent at the best of times,” says Blaine Bertsch, co-founder and CEO of Dryrun, and author of Pandemic Cash Flow, which explores the problems businesses face, such as cash management. “From talking with restaurant owners, some are at break even with the curbside pickup. We’ve lost a bunch already. Some are hanging on, but it’s hard to tell how long they’ll be able to hang on.”

Several findings from the CFIB survey show just how precarious the situation could be for many small businesses. About 34 per cent of respondents stated that they were behind in major bill payments, such as rent, credit cards or critical suppliers. The number jumps to 47 per cent in the hospitality sector. And more than a quarter of all businesses responded that their biggest worry was having to close their business permanently. 

“They’ve been able to perhaps borrow money to keep the lights on and keep some activity going, but they’ve still got a debt load built up in order to get through the next couple years,” adds Mallett.

But with new restrictions in place, and the costs associated with managing the new realities of post-lockdown business, it’s changing the whole economics of various types of firms, he adds.

“Are they viable in the long run? We’re looking at things like the entertainment industry—is that ever going to be the same?”


While the lockdown has devastated businesses across the country, others have thrived due to a dramatic shift in consumer behaviour. This includes home-gym products such as Peloton and online home retailers such as Wayfair.

“Any sort of hobby shops, bike shops have been doing really well,” adds Bertsch. “Some of the home reno places, especially the big chains, have a lot of traffic coming in because people are at home, they’re doing their renos.”

But he emphasizes this is the minority; other businesses will need to carefully plan their way through this uncertain period. 

Bertsch is also a presenter for a CPA Canada webinar on maximizing your business during and after COVID-19, which focuses on cash management practices. Among some of those tips, he points to understanding how much it costs to stay in business right now and evaluating your growth rate. 

“Tied to that is your runway,” he says. “So, when exactly will you run out of cash, watching that like a hawk. What we recommend to businesses now is to start modelling out these different opportunities that you have, the different revenue models. And a lot of it is just trying to extend that runway. Give yourself some time to adapt to make changes in your business.”

Bertsch says where CPAs can really contribute is helping their clients forecast the upcoming three to six months, how things are looking into 2021 and offering their input on that. 

“This is where clients are winning or losing,” says Bertsch. “They’ve got to make some plans and make the right decisions, and that CPA can be basically right next to them helping them along with that.”

CPAs from across the country continue to lend their expertise as part of the Business Resilience Service (BRS) hotline. The bilingual service, which has been extended until July 6, aims to help small businesses, not-for-profit organizations and charities in need of financial planning advice during the COVID-19 crisis.


Since the onset of the pandemic, the federal government has introduced a number of measures designed to support businesses, including the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Business Account (CEBA), the Canada Emergency Commercial Rent Assistance (CECRA), the Temporary Wage Subsidy and tax deferrals.

Ontario recently joined B.C., Alberta, Saskatchewan and Quebec in announcing an eviction ban of any small business that qualifies for the CECRA program. The CFIB released a statement applauding the decision, saying, “we are relieved that no more struggling small businesses will find locks on their doors because their landlords are unwilling or unable to participate in the CECRA program.”

Although recent changes to CEBA will help more small businesses access the loan, the CFIB survey shows that business owners are looking for additional improvements to relief programs. Mallett highlights the restrictions in the CEWS program, which has a threshold of at least 15 per cent revenue reduction in March, and at least 30 per cent in April and May in order to qualify.

“We’re recommending it becomes more of a sliding scale,” he says. “Many businesses had to lay off their employees before these programs were installed. Now the issue is trying to get people back into the workforce as quickly as possible.

“Businesses may be down 32 per cent in one month based on previous year’s performance. In the next month they may be down 29 per cent and not qualify for the program. Those are the kinds of issues [where] it becomes really risky to hire your employees back, not knowing whether you’re going to be covered. If it’s a sliding scale, it gives them a lot more assurance that they qualify—it’s only a matter of how much as opposed to if they qualify at all.”


Learn about coping with the effects of COVID-19, including survival tips for small businesses as well as how to pivot your business and ensure continuity.

In addition, stay up-to-date with the latest COVID-19 tax updates and news related to the accounting profession, including a compilation of external resources and online news articles.