How Covid-19 affects the lifestyle of Canadian Businesses

Acknowledgment:

How businesses in Canada have changed their operations influenced by the new unexpected virus Covid-19, and how different business categories have responded to the new pandemic, is the main topic of the following research. This particular topic I selected for my research to illustrate that how well-established business setups in a well-developed economy, enjoying effective support of the government and adopting all techniques to mitigate any likely risk were not prepared for the pandemic crisis and are now prone to the impact of Covid-19.

Canada being one of the major producers and exporter of oil and vehicles, is among the most flourished economies across the globe. However, the same economy which was on ascending mode a few months back is now descending since last March 2020. The intrusion of unexpected and unwanted Covid-19 among the routine business processes has turned every business segment upside down, popular Canadian businesses that were once recording high sales are now entering heavy losses in the same ledger accounts.

The following research has been conducted to analyze the influence of the new pandemic over the businesses in Canada, and to evaluate the chances for the survival of SMEs which are an important component of the country’s economy, through the pandemic crisis. 

As the current pandemic crisis caused by Covid-19, is new, quite rare and sudden, think tanks, science analysts and health concerns are still unable to conclude any authentic information or opinions. As such information and data has been accumulated to conduct this research, through the news media and government’s provided statistics, which is the only effective source of authentic information at the moment. 

Purpose of Research:

Our world had been a victim of different levels of virus attacks in the past like influenza pandemic of 1918, Asian Flu in 1957 and H3N2 virus in 1968, resulting in huge numbers of human mortality and disruption of economies. However, the past pandemic crisis lasted for specific period, after the crisis period the economies re-developed, business activities restarted and came to normal routine after some time depending on the level of loss created by the pandemic in those days.

The world since the last pandemic crisis i.e., H1N1 Pandemic in 2009, has changed a lot, technological developments has reached the heights and still growing, means of communication are faster, and internet has taken over as the most influencing factor over the people’s mindset and buying attitude. Covid-19 is the most advanced version of all the past pandemics, in this research it will be evaluated that in the when the world was less developed

In this paper it will be evaluated that though Covid-19 is the most advanced version of all the past pandemics, will the today’s advanced world with all its developed technical tools would be successful to mitigate the impact of the new virus. This research will also attempt to conclude the answer of another question that is quite relevant to the current situation, i.e., the advance technologies that is regarded as the pride of the current world, will it be able to aid the businesses to survive through the current pandemic crisis.

Introduction:

Canada being the most advanced country in North America is regarded as the most preferred regions on globe for any business owing to its business favorable policies, tax system and abundance of natural resources. According to a comparison stated by the World Bank, starting a business in Canada is easier after New Zealand and Australia (Doing Business, p. 58, 2013). However, irrespective of government’s interest and favorable business environments businesses are always vulnerable to certain risks which could temporarily harm its procedures, but total loss or complete failure of business is quite rare and only very few businesses fell victim of any such risks.  

Unfortunately, the entire businesses in Canada either primary, secondary or tertiary sectors all are quite badly affected by an extremely unpredictable disease Covid-19. Though, all businesses either small scale or large business setups adopts risk management techniques to counter with any likely risk or threat, however, threat like Covid-19 was neither expected nor any of the businesses had planned any strategy to deal with the impact of any such disease. Covid-19 has reversed the flow of businesses not only in Canada but throughout the globe.

Owing to the virus’s impact millions of employees had been laid off or will be terminated in future, many prominent business brands had announced their permanent closure, manufacturing industries had either limited their operations or seized for an unlimited period, majority of individuals of tertiary sector are jobless, as such business sector having a major influence on Canada’s economy, the country’s economy is paused at the moment.    

The collapse of once smooth business activities in Canada appealed to me as its economy was developing seamlessly, individuals from across the globe were moving to Canada for a better future, and the country was in process of inhabiting its huge developing area through establishing more industries and businesses. In the following research it will be illustrated that how Covid-19, influenced the significant revenue generating business of Canada.

Influence of Business Sector on Canadian Economy;

SME’s are the roots to the global economies and closely linked to daily livelihoods (Izumi & Shaw, 2015). many scholars have recognized and demonstrated the crucial role played by SMEs as a driving engine of growth, job creation, competitiveness in global markets and the general health and welfare of economies both nationally and internationally (Soininen, 2013). Small and medium scale businesses are among the major contributors of Canada’s economy. The business sector of Canada has been a significant support for the country’s development. it is not only the biggest sector providing employments to the locals and huge numbers of immigrants, it is also the among the leading industries generating revenues for the government in the form of taxes.  

Economies are always supported by their rate of employments. As stated by Wang (p. 405, 2011) that employment is always the social focus, and is also one of the most important factors in national economy, Canada had been privileged with a good percentage of employment provided by its small and medium scale businesses.

The following Pie chart clearly defines the share of small and medium size businesses, in the entire Canadian employment.

Source: Statistics Canada, Labour Force Survey; and ISED calculations. Government of Canada.

https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point2-1

The greater number of employees means more individuals would be spending money for buying other products of their needs and would be utilizing services like transport, education, medical, recreational. Thus, they would be creating more avenues for revenue generation for other businesses or services as well. Moreover, the same employees either local or immigrants would also be paying for the basic utilities like electricity, gas, etc., as such they are also a direct source of revenue for the government. Hence, it can rightly be stated that Canada’s private business sector is one of the pillars of its well-established economy, and any shock on it will impact the entire economy of Canada.

Government’s Interest for SMEs;

Considering the significant contribution of SMEs, Canadian government has been offering varied opportunities for the establishment of new businesses and facilities to already established businesses. Canada’s framework of policies, such as product and labour market regulation, are generally supportive of small business dynamism (Better Policies Policies for Stronger and More Inclusive Growth in Canada, 2017), moreover the government has developed varied packages for financial, technical and advisory support of the SMEs in pursuit of their business’s expansion or stability. Canada Small Business Financing Program (CSBFP) portrays Canadian government’s interest for the support of small business set ups (IBP 2017), when a bank lends money to a small business and is not paid back, the government will guarantee payment for as much as 85 percent of the loan (Boone et al., 2020). Hence, Canadian government is adopting all measures for the support and protection of its SME sector.

Inconceivable Situation:

Businesses in performing their procedures adopt various precautionary measures to avoid any disruption among the performance of their operations. They do consider the past events that influenced the business operations and also take advantage of government’s support programs to pursue a seamless flow and progress of their business procedures. However, natural calamities are beyond their or even the government’s control. Natural calamities like earthquakes, floods, tsunamis or storms can be seen or felt, and due to their occurrence in the past governments have well established prevention or forecasting systems to mitigate the impact of such known calamities. Unfortunately, Covid-19 is a natural calamity which is unseen, had no past records and none even the most advanced nations were prepared for it or had any established programs for the prevention from the disease.   

Covid-19 in a very short span ceased all segments of life across the globe, not only it brutally affected health of millions of individuals but it also greatly influenced the global economies by ceasing all business operations across the globe. Having no developed treatment or preventive measures from Covid-19, governments were left with the only option of social distancing, discouraging people from coming out of their homes, pursuing their businesses or jobs. Suspension of all business operations immeasurably affected the lives of billions of individuals but also shuddered the economies.

Covid-19 vs Businesses in Canada.

Canada one of the most advanced country and biggest exporters of oil and gas, also couldn’t avert itself from the disastrous impact of Covid-19. The fear of the virus and government’s regulation of social distancing changed the entire scenario of daily life routine among the streets and markets of Canada. The market places that used to be packed with people busy in shopping or chatting in a coffee shop, became deserted. All type of businesses came to halt, people were only coming out to get basic necessity items like food stuff, toiletries or medicines.

Business operations involve mutual sharing of interest by all stakeholders like customers, suppliers, manufacturers and the retailers. Lack of interest or absence of any of the stakeholder will disrupt the entire business proceedings, generating loss for all the concerned stakeholders. Unfortunately, due to Covid-19 all the concerned stakeholders of a business discontinued their activities. Thus, all the stakeholders are affected, suppliers, manufacturers and retailers would not be generating revenues anymore either for themselves or for each other while the customers whose earning is also affected as himself being a part of some other business or a service industry will restrict its buying practice to only the basic and most needed products.

As the disease is highly contagious and maintaining specific distance among the people is the only preventive strategy, health concerns have been advising and imposing, managing distance among the customers and the workers in business set-up is a quite difficult task. Though majority of businesses have implemented advance automated technical tools for most of the segments of their operations which require least or no operator, but still there are many business procedures in which the workers have to perform their task working close to each other, for instance in packing procedures, or dealing with customers. For manufacturing MSMEs in lockdown situations, remaining open is challenging as factory floors are not designed for social distancing (Skidmore, 2020). Thus, distance cannot be maintained among the employees or the customers. As such, businesses either have limited their operational procedures like suspending some of their procedures, limiting the number of workers, or working in shifts. All such measures though preventive, have resulted in significant decline in sales and revenues. Nearly one-third – 32.3 per cent – of businesses have lost 40 per cent of their revenues during the pandemic (Evans, 2020).  

Small and medium scale businesses are the most affected by the pandemic. Such business set-ups are usually family owned and employs around 3 -10 workers. Having no production of their own are totally dependent on the supplies of the finished products. Particularly most of the SMEs associated with garment or food business, house hold accessories and other domestic tools are getting supplies from China, and as Wuhan being a large transportation hub majority of products have to pass through it prior to being exported to Canada (The Impact of, 2020). Thus, owing to the global pandemic crisis, supplies will be disrupted resulting in empty shelfs of SMEs.   

Moreover, customers being the main source of revenue, who are practicing self-isolation, SMEs will no longer be generating revenues, that is no customers no sales. According to the Canadian Federation of Independent Business, about 22 percent of small businesses have had their revenues drop to $0 during the pandemic (Cousins & Battis, 2020).  

The closure of family owned Army & Navy departmental store chain, a leading brand of Canada (Correla, 2020) portrays that not only SMEs are affected but the large business set-ups and prominent brands also couldn’t bear the impact of Covid-19. Another example of the pandemic’s impact is of Goodlife Fitness and Fit4Less Clubs, which announced closure of all its locations across Canada in response to the Covid-19 pandemic (O’Brien, 2020).  

Another significant revenue generation business sector that is considerably affected by the pandemic is hospitality and tourism. Tourism sector of Canada is regarded as one of the major contributors of the country’s economy, generating huge revenues for different private and government segments associated with the hospitality and tourism. However, since the landing of Covid-19, the same industry is on a stand still position.

Before the pandemic was officially announced and lockdown was imposed, all the stakeholders of tourism industry like hotels, travel guides, vendors and potential tourists were preparing for the upcoming summer season. The summer season generally early June to the end of August, remains predominant tourist season in Canada (Rantala et al, p. 23, 2019), and is regarded as the major revenue generation period of the whole year. However, the pandemic shattered all plans and preparations in process among the tourism industry. No tourists mean no business, as such the business owners of tourism industry will be facing heavy losses this year. It will not only the business owners who are and would be suffering from losses but the employees among different segments of tourism sector are now jobless and dependent on government grants. According to the president of the Hotel Association of Canada, hotels have laid off more than 250,000 workers and reported a 90 percent drop in revenues as occupancy plummeted to less than 5 percent (Jackson, 2020).

Automotive manufacturing is among the top business segments in Canada, contributing huge shares in the country’s economy. In the auto sector, Canada is home to more than 1,300 firms, which employ approximately 130,000 workers, and have annual revenues of $71 billion and annual exports of more than $53 billion (Klassen, 2014). The same huge revenue generating auto industry also couldn’t avert the impact of Covid-19, many auto manufacturing firms has laid off significant number of workers and almost the manufacturing plants have suspended their operations owing to the contagious nature of the virus and decline in demand across the globe.

Almost, all businesses either small or on large scale, retailing or manufacturing, are somehow affected by the pandemic. Some businesses will disappear from the markets, while some who have means to pause their operations during the crisis and recontinue their operations once the impact of crisis is mitigated, will not be able to continue with the same procedures as it was before the pandemic. The assumptions that conditions will go back to normal and things will be as they were before the crisis may be fatally flawed (Piercy, Cravens, Lane, 2010).

The major requirements for a successful business operation are the capital, workforce and the customers, as the entire global economy is in a recession phase, for Canadian business setup to survive through recession would be an issue, secondly as the customers are also afflicted with the impact of the pandemic there buying attitude will not be the same.   

Different Businesses Perceived Different Impact of Covid-19:

The pandemic undoubtedly jolted the foundations of almost all businesses in Canada, irrespective of their scale or age, but the same pandemic turned up to an opportunity for more revenue generating for some businesses. Lots of studies show that there are still some sectors that have been affected a lot from the pandemic crisis, however, there are companies which show a remarkable yield and it seems that they get a benefit from the crisis and make use of chances (Bourletidis & Triantafyllopoulos, 2014). The need for household necessities and food has benefited some of the country’s largest grocers, which remained open as essential businesses (Valinsky, 2020). Particularly, the businesses involved in the production, supplies or retailing of daily consumed food products like confectionary products, toiletries, fruits/vegetables, and other daily need products, recorded more or same sales as it was before the pandemic.

Fear of prolong isolation period and products might be out of stock in markets, compelled the people  to stock maximum quantities of the required items at home, also many people opted for daily or weekly buying of their daily needs products, hence, the producers, suppliers and retailers of daily domestic products are least affected by the pandemic in fact they are doing more business during the pandemic crisis than they were during normal days. 

Living digital era has produced enormous business opportunities during the time of economic crisis (Penalvo, Figuerola, Merlo, 2010). As such, businesses or services that do not involve any physical interaction with the customers or the clients, that is business done online are the one’s least affected by the pandemic. Fear of the disease and isolation are the two leading factors causing the significant growth of online business, since March till date. Almost three in 10 people are shopping for things online that they normally would have bought in-store, according to a survey of more than 30,000 Canadians by Chicago-based market research firm Numerator (McLeod, 2020).

Moreover, the already operating grocery chains and doing roaring business further to enhance their sales, taking leverage of online orders added more counters for online booking and increased their fleet of order suppliers by hiring more employees. the same strategy not only enhanced their sales but also provided an earning opportunity for many individuals who were out of job since the invasion of Covid-19.      

Another difference in perception of the pandemic’s impact can be witnessed in the transport business sector. When all domestic and international passenger carriers have seized their operations, even the public transport utilities within the cities are suspended, business of goods carriers and delivery services has enhanced. These goods carriers are mainly involved in transporting essential products related with human health and food, within the Canadian cities and between USA and Canada. Also, more people opting for online deliveries has increased the demand of delivery personals.  

Businesses adjusting their procedures for the survival:

The pandemic attack was unexpected and unmeasurable, even the most experienced and skilled economists or crisis analysts had not foresighted any such crisis in the future. Having no management plan or preventive strategy to counter with the pandemic crisis, businesses were left with the only option that was to seize their operations. However, opting to survive through the pandemic crisis, some of the businesses, in particular of the retail and service sector, modified their operational procedures, and taking aid of internet technologies switched to online operations.

Most of the owners of closed restaurants are now operating from their homes, preparing products in their home kitchen and selling through online orders. As the government only allowed necessary items stores to continue with their business during the lockdown phase, producers and retailers of unnecessary products like furniture, garments, footwear or hardware were in the top line to be affected. However, unnecessary business owners depending on their affordability and knowledge of the online technology, have established online platforms for their companies, and are now offering their services or products online. Thus, the businesses that were expected to suffer huge losses due to being officially restricted to conduct their operations as a preventive measure against the pandemic, owing to the internet technology now have the opportunity survive through the pandemic crisis, unless the potential customers need and can afford their products.

Businesses switching to online sales not only aided the individual brands in sustaining their position during the lockdown period but also has provided employment opportunities as more people are required for the product’s home deliveries. 

Businesses are always influenced by the customers mindset and their demand. Whereas, customers are influenced by the economic conditions of their region. It is witnessed that in a progressive economy people have more buying power. The current phase of pandemic crisis has significantly modified the peoples buying preferences, they are restricting their shopping to essential commodities only and mostly opting for online purchases. According to a survey a significant number of Canadians began purchasing online for the first time in their lives during the pandemic (Unger, 2020). Hence, based on the customers changing mindset and preferences businesses have to modify their procedures accordingly. Adopting online technology seems to be the only option for businesses to survive through the pandemic.

Chances of Business’s Survival Through the Pandemic:

At the moment researchers, scientists and health concerns across the globe seems to be helpless in formulating any medicine or technique to save the world from the disastrous impact of Covid-19. Mode of routine living has completely changed, businesses particularly on small and medium scale are the one’s to bear the worst impact of the pandemic.

Though Canadian government is implementing all measures to steer its business sector out of the crisis, through financial grants, tax concessions, and rent subsidies but all such measures have not proved there worth till yet. However, the businesses who are modifying their strategies according to the changed circumstances are somehow able to manage their sustainability during the crisis period.

The current crisis has also influenced the preferences, buying attitude and behavior of the customers. In the current situation people are only opting for the products that are necessary for their living, moreover people avoiding the crowded areas, are preferring to get their necessities at their door step. Even the services like health or legal advises, academic learning, technical courses or physical training are also acquired online available on different digital platforms. 

Considering all the mentioned facts, it appears that there are only two options at the moment for the businesses to survive through crisis, that are restricting the business operations only to the production and sale of necessary products, and implementing internet technology for the sale and supply of their products.      

By restricting the business activities only to the necessary products, the company’s cost would be reduced, thus less capital would be required. Though, the revenue they would be generating would not be the same but at least they could sustain their existence in the market. Secondly, by establishing an online platform for the sale and supply of their products, they would be able to cope up with the customers changed preference of getting their choice of product at their door step.

Hence, the advance technology would be an effective aid for the businesses to get through the crisis period.    

Conclusion:

We are living in the most advanced era of the century, our lifestyle, habits, mindset and demands are greatly influenced by the most modern digital technology. Our health facilities and engineering units are all equipped with the state-of-the-art tools and equipment, producing services and products, which has enhanced our health and living standards. The same technology has provided varied opportunities to the business setups to expand their operations and adopt preventive measures against any likely factor that might interrupt their procedures.  

Canada is among the most advanced nation on globe, its industries and business sectors enjoys the benefits of the most modern technologies and a good support of the government as well. However, the current invasion of Covid-19, has deteriorated all benefits of the utilized advanced technologies and the implemented preventive measures by the businesses, resulting in heavy losses and rise in unemployment rate.

Conducting this research, it is analyzed that the same advance technology if utilized wisely can effectively aid businesses to steer out of the crisis period. Internet technology being the most useful product of the advance technology, has proved its worth in the current pandemic crisis period. It is witnessed, that the business companies who were already operating online are least affected by the impact of the pandemic or in some case they are generating more revenues in the current crisis period.

Considering the options internet technology offers, SMEs being the most important component of Canadian economy and also most affected by the pandemic, should switch to online platforms to pursue their procedures, to survive through the pandemic period. It will not only support them to retain their position during crisis, but will also leverage their business once the things return to normal again. 

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