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Snarled supply chains are increasing the cost of doing business, ahead of the crucial holiday spending season

Toronto, November 18, 2021 – Supply chain issues are casting a shadow over the holiday season for small businesses at a time when many are facing increasing costs while still not back to normal sales levels, warns the Canadian Federation of Independent Business (CFIB). In a recent CFIB survey, supply chain challenges were the second biggest concern for businesses heading into the fall (64 per cent), but they take the top spot in sectors like wholesale (84 per cent), construction (80 per cent) and retail (78 per cent). As Parliament returns, CFIB urges the federal government to delay further tax increases to help offset some of this new pressure on small businesses.

“Supply chain disruptions are hitting at the worst possible time for small businesses. Many rely on holiday sales to get in the black or build a reserve for the lean months at the start of the new year, but businesses are reporting shortages or delays in everything from equipment parts to concrete to seasonal décor, and the developing situation in BC will likely exacerbate that,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “The federal government needs to reassess whether this is the right time to raise the cost of doing business even further and halt its planned increases to CPP and other taxes.” 

Input costs, shortages and price increases all see a sharp uptick this year
The share of businesses reporting that product input costs are causing difficulties has increased sharply on CFIB’s Business Barometer® since the start of the year. In October 2021, 44 per cent of businesses reported this was an issue, compared to 28 per cent in January. The shortage of input products is also now holding back the growth of 31 per cent of businesses, more than double the January rate of 15 per cent.

Not surprisingly, added cost pressures have a big impact on businesses’ average price plans: in January 2021, businesses planned to increase prices by an average of 2.1 per cent over the next 12 months. In October, the average price intention reached a staggering 3.9 per cent, by far the highest on record since 2009 when CFIB started releasing monthly Barometer results.

CFIB is urging all governments to find ways to keep the cost of doing business from going up, including:

  • Freezing the scheduled 2022 Canada Pension Plan (CPP) increase and all other taxes on business. 
  • Maintaining support programs and subsidies until the entire economy can reopen, and small businesses can serve all their previous customers in person. 
  • Extending the repayment term for the Canada Emergency Business Account (CEBA) loan to December 31, 2024 to give all businesses a chance to return to normal sales volumes. 
  • Introducing a 50:50 split in EI premiums paid between employers and employees for small businesses 
  • Addressing labour and skills shortages.
  • Evaluating and reducing the red tape burden.

“There are no easy solutions to supply chain issues and the impacts are being felt by every sector. However, governments can and should control the costs they impose on small businesses, especially at a time when many are struggling to get out of debt and back into profitability,” concluded Pohlmann.

For media enquiries or interviews, please contact:
Milena Stanoeva, CFIB
647-464-2814
[email protected] 

Methodology
This news release presents findings from the following recent CFIB surveys:

  • Your Voice – October 2021: An online survey completed by 4,097 CFIB members between October 5 and 27, 2021. For comparison purposes, a probability sample with the same number of respondents would have a margin of error of ±1.5 per cent, 19 times out of 20. Results obtained so far are preliminary.
  • October Business Barometer®: October findings are based on 841 responses from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received from October 4 to 18. Findings are statistically accurate to +/- 3.4 per cent 19 times in 20.

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 95,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.

 

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