High insurance costs and insufficient demand for goods and services are impacting the confidence level of Ontario small and medium-sized businesses.
There are a raft of issues identified by the Canadian Federation of Independent Business (CFIB) behind the plummeting rate of confidence by owners of small businesses in the economy.
CFIB said 70 per cent of businesses are struggling with high insurance costs while 57 per cent face difficulties with insufficient demand (domestic or foreign), the highest since the pandemic.
CFIB keeps score on small business confidence through its Business Barometer Index, which it says reflects the state of the economy.
Measured on a scale between 0 and 100, an index level above 50 means that owners expecting their business performance to be stronger over the next year outnumber those expecting weaker performance. During pre-pandemic times, index levels normally ranged between 65 and 75 when the economy is growing.
CRIB says the long-term business confidence for the next 12 months has dropped a “disturbing” 6.7 per cent since March to 49.2 in April.
“Rising costs on everything are making it almost impossible for small businesses to achieve any meaningful headway on recovery,” said Ryan Mallough, CFIB’s vice-president of legislative affairs for Ontario, in an April 25 news release.
“Sadly, far too many CFIB members who’ve been around for years are feeling that running a business is becoming all pain and no gain.”
The April barometer results reveal that insurance costs and fuel costs tied as the top reported cost constraint for Ontario small business owners, followed by wage costs and tax/regulatory costs. High insurance costs are causing difficulties for 70 per cent of Ontario businesses, the highest point in decades and way above their historical average of 51 per cent.
CFIB urges the Ontario government to focus on small business affordability measures by lowering the Small Business Tax Rate (SBTR) sand increasing its threshold.
“With demand for both goods and services consistently low, it’s still a challenge for many small businesses to get back to their normal revenue level for this time of year,” said Julie Kwiecinski, CFIB’s director of provincial affairs for Ontario, in a statement. “The minute small businesses get an inch ahead, they’re hit with even more increased costs, forcing some to pass down at least a portion of these extra costs to customers.
“Small businesses need cost relief now,” said Kwiecinski. “We continue to urge the Ontario government to focus on small business affordability measures, including lowering the Small Business Tax Rate (SBTR) and increasing the SBTR’s threshold that has been stuck at $500,000 since 2007.”
CFIB, an advocacy group behind driving government policy change, represents 97,000 small-and-medium-sized business members across Canada, including 38,000 in Ontario.
