RBC releases five-point plan to help 'small
business make big pivot' to a post-pandemic economy
TORONTO, June 11, 2020 /CNW/ - A five-point plan to help
Canadian small businesses thrive in a post-pandemic economy was
released by RBC today.
The report includes proprietary economic research and analysis
from a survey of small businesses, which generated 22,000
responses. It cites two core challenges facing the country's
million plus small business, which is defined as companies with a
maximum of 100 employees. The sector is reeling from the economic
lockdown. It recorded almost double the rate of job losses as
mid-sized and large firms during the first two months of the global
pandemic. Women and youth bore more of the pain, since they are
over-represented in small-business employment.
The health crisis has also created new economic trends and is
accelerating others, which requires "small business to make a big
pivot" into a more virtual, local and fragmented operating
environment. For instance, approximately one-third of Canadians are
shopping online for goods and services they normally would have
bought in a store. Yet many small businesses remain "digital
novices." Statistics Canada has
noted a significant number of small firms are without a website, or
the ability to facilitate online payments.
"The scars of an unprecedented recession are already visible on
every Main Street in Canada, but
the impact extends well beyond mom-and-pop shops or the retail
sector," said Dawn Desjardins,
Vice-President and Deputy Chief Economist, RBC. "In many ways,
small businesses are the Canadian economy, representing more
than 40 per cent of GDP, and close to 60 per cent of new jobs prior
to the health crisis. We cannot expect a full economic recovery
without a small business rebound." As such, policymakers must help
craft strategies to help small businesses remain solvent and exit
stronger from the recovery. The report notes that preparing for the
longer-term may seem out of sync with the immediate challenges of
survival. But to be unprepared for a very different kind of
recovery could be just as costly as the unprecedented collapse.
"Small firms will need to seize on new technologies and
permanently altered consumer preferences to attack markets and
build brands in entirely new ways," says John Stackhouse, Senior Vice-President, RBC.
"While resilience will be important, adaptability will be
critical."
Prospering in a post-pandemic economy
RBC has
encouraged leaders in the public and private sector to adopt a
five-point plan. The overarching principles are as follows:
- Streamline relief programs for the recovery:
Ottawa has committed a historic
amount to small business through the crisis, and a range of
programs is helping many stay afloat. But some of the programs are
too complicated or too dependent on debt instruments. As we shift
from relief to recovery, and then to a slow rebuild, the federal
government has an opportunity to refresh and streamline those
relief efforts.
- Invest in capacity to reopen safely: Every enterprise
will be challenged to reopen. Many smaller ones will be doubly
challenged because they don't have the experience or expertise to
operate in a transformed economy and work environment. Provincial
governments, which have been more focused on public health than
private enterprise, can help both by investing in broad-based
programs to assist employers as they try to get back to
business.
- Create new networks for a massive digital push: The
pandemic has led to a big increase in cross-border data flows, and
a greater concentration of power among global platforms that are
helping consumers search, share and shop from a distance. Canadian
enterprises need to pivot to this growing reality.
- Implement new economic strategies to scale small
business: Small firms will not only need tools for the
post-pandemic economy; they'll need to form alliances—the
equivalent of digital coop movements to compete in the global
platform economy. That's just one imperative in a transformed
economy that will be more fragmented, more localized and more
challenging for smaller enterprises. Scale will matter more than
ever, to drive efficiencies for consumers who may want local for
less. As governments and large enterprises contemplate a recovery,
they may have the opportunity to create Canadian alliances for
procurement and supply chains that will strengthen the economy and
communities across the country.
- Adopt a more strategic approach to globalization: The
pandemic upended supply chains and shone a spotlight on some of the
unintended consequences of globalization. Some small firms rose to
the challenge, retooling to produce critical products like masks
and ventilators. Their response highlighted the capacity of
Canada's manufacturing sector to
pivot and innovate quickly. Small firms will need to do a lot more
of that, and not just for the domestic market. In a world that is
likely to be more fragmented, and perhaps less welcoming to foreign
firms, Canada will need a more
focused approach to trade.
Stackhouse said: "During the global financial crisis,
policymakers worried about 'too big to fail, as they protected
systemically important banks and insurers, and shored up
supply-chain foundations like auto companies. This time around, the
emerging policy motto needs to be 'too small to fail,' as small
business will be relied on to restore local demand and job creation
across the country and economy."
About RBC
Royal Bank of Canada is a global financial institution with
a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 84,000+ employees who bring
our vision, values and strategy to life so we can help our clients
thrive and communities prosper. As Canada's biggest bank, and one of the largest
in the world based on market capitalization, we have a diversified
business model with a focus on innovation and providing exceptional
experiences to our 17 million clients in Canada, the U.S. and 34 other countries. Learn
more at rbc.com.
We are proud to support a broad range of community initiatives
through donations, community investments and employee volunteer
activities. See how at rbc.com/community-social-impact.
SOURCE RBC