For small businesses that survive COVID, recovery is expected to be difficult

Having 12 cases of mini eggs on hand sounds like the makings of a grandiose Easter hunt or the ultimate way to soothe a sweet tooth, but for Josie Rudderham, the confections have put her in quite the crunch.

“We have joked about pouring them into a bathtub and doing a photo shoot because there is enough to do that, but really they are part of the cycle of investing in ingredients to make a lot of sales that didn't happen,” said Rudderham, the co-owner of Cake and Loaf in Hamilton, Ont.

She spent the first months of the COVID-19 pandemic closing one of her two bakeries, taking on debt, laying off workers during the busy Easter season and offering curbside pickup, but the boxes remain. Worse still, she believes her business won't fully recover for another decade.

The projections are quite similar for most of the country's 1.14 million small businesses still lamenting empty dining rooms, stores and cash registers, and fretting about how they can rebound from the pandemic's economic impacts.

The Canadian Federation of Independent Business says a survey of its 110,000 members shows only 26% of small businesses are reporting normal sales volumes, leaving the remainder at risk of insolvency.

Those that do survive aren't likely to emerge from the pandemic unscathed. The CFIB estimated in June, before Canadian COVID-19 infections began rising again, that small businesses will incur $117 billion in debt that could take more than a year to pay off.

“The majority of them have said that they are losing money every day that they are open and I guess the question is how much longer can that happen,” said CFIB president Dan Kelly.

Reversing the trend will take a return of sales at a time when many businesses can't get COVID-friendly insurance, patio season is coming to an end, offices are showing no signs of reopening and Ontario and Quebec are plunging into second waves.

CFIB wants the government to help small business owners recover by suspending evictions and property seizures for shuttered businesses and providing immediate financial support to cover ongoing costs like rent and taxes.

Sheila Block, a senior economist with the Canadian Centre for Policy Alternatives, also believes public coffers have a role to play in the rebound, but warned government relief isn't a cure-all.

“The only thing that will ensure that small businesses can come back to life is the public health situation and that is going to take some time,” she said.

While the wait continues for a COVID-19 vaccine, Kendall Barber is keen on getting Poppy Barley, the Edmonton-based footwear company she co-owns with her sister, back on its feet.

When COVID-19 struck, the pair temporarily shut down their two Alberta stores, laid off some workers and put plans for pop-ups across the country on hold.

“All of our factories closed, so we had no ability to get products, and even developing our fall collection was hard because tanneries and facilities were closed and located in countries that are much harder hit by COVID-19 than we have been here in Canada,” said Kendall.

Poppy Barley reverted to its roots in e-commerce. Fans of the brand made purchases online, but not enough to make up for what was lost from closures.

Recovery, said Barber, will now rely on meeting the customer where they are.

For Poppy Barley, that means slowly bringing back pop-ups in 2021 and shifting to meet new consumer needs with fewer high heels, footwear made from ultra soft materials that don't need breaking in and a plant-based collection.

For many small businesses, which have grappled with layoffs, rent problems and mounting bills, recovery will also mean leaning on customers.

“The simple answer is shop, buy their food, spend your money with them,” said Barber.

“On the darkest days getting a great email from someone saying, 'Keep going. I love what you're doing' has also been really meaningful.”

Changing business models will also be a big piece of recovering, said Rudderham.

“I don't know that I want to get back to the way things used to be, to be perfectly honest,” she said. “I'm not sure that was actually healthy for anyone.”

Before the pandemic, her business took pre-orders and opened six days a week for walk-in purchases, requiring bakers to speculate on what and how much to make each day.

Busy seasons or large orders would sometimes mean overnight shifts to have product ready by morning.

Rudderham envisions a switch where the business could focus primarily on pre-orders and curbside pickup, giving workers steady hours and eliminating the need to employ counter staff to await drop-in customers.

The economics, she said, would allow the business to focus on larger orders and supplying other retailers like a nearby co-op, instead of hoping for people to walk in for a coffee or muffin.

Rudderham isn't sure how many of those ideas will be implemented, but insists deep thought is key to any recovery.

“This is a chance for everybody to reassess what is really important about the way we live our lives and how we run our businesses because the normal that existed before the pandemic is not a normal that was working for everyone.”