The major impact of small businesses in Canada: Small Business, Benefits and COVID19

By Lindsay Byrka | BA, BEd, CFP
Vice President, Immix Group: An Employee Benefits Company

The major impact of small businesses in Canada: Small Business, Benefits and COVID19

At Immix, we have paid special attention to the especially precarious financial situation facing small businesses over the past 3 months. As employee benefits brokers, we have been helping our clients navigate their benefits and HR policies, with so many layoffs and work stoppages occurring. We have helped our clients to promote mental health and employee assistance programs, and of course, we have ensured all cost containment measures are taken.

But what else can we do? As our society gradually reopens in the wake of the COVID-19 pandemic, it is more important than ever to support local small businesses.

The impact of the lockdown on small businesses has been enormous

Even at the best of times, a small dip in revenue can mean the inability to pay bills or wages, especially for service businesses, with their extremely thin margins. The economic situation is obviously creating much worse than a small dip, with some industries completely closed for months on end. These small businesses may not survive, even as they are now granted permission to reopen.

Government programs have helped, but they do not replace the economic activity generated by an operating business. And unfortunately, many have been left out of these programs due to the qualifiers, or quite simply, it’s not even close to enough money to save their businesses.

Small and medium sized businesses in Canada (known as SMEs) are the backbone of the Canadian economy. Did you know:

•  Of the approximately 1.2M employer businesses in Canada, about 98% are small businesses, under 2% are medium sized. This leave just a tiny fraction that are large employers.

•  A small business is defined as having 1 to 99 paid employees

•  A medium business has 100-499 paid employees.

•  The majority (~54% of the total of 1.2M businesses) are micro-enterprises with just 1-4 employees.

•  A total of 3 out of 4 Canadian businesses have 1-9 employees

•  Small businesses employ 8.4M people, and medium sized businesses employ 2.4M people

•  About 80% are in the services-producing sector.

•  80% of people are employed in the private sector, with approximately 90% of those working for SMEs.

•  Here in BC, this number is higher than the Canadian average, with over 93% of those employed int eh private sector working for SMEs.

•  The contribution by SMEs to the GDP is around 50%.*

What does this tell us? SMEs play a crucial role in our economy!

The needs of small businesses are unique. As a small business ourselves, working primarily with other small businesses, we’re very familiar with not only the raw data above, we are familiar with the concerns and struggles of these businesses.

In our role as benefits consultants, we get to know our clients from both a financial perspective (the good and the bad they are experiencing), as well as from the human resource side (the struggles and victories associated with the ever-important human capital).

Our goal is to provide SMEs with innovative solutions

An area of challenge for many small businesses is employee benefit programs. As the numbers above show, most businesses are not giant corporations with specialized in-house experts. To bridge the gap, small businesses need to choose the right benefits partners, someone that will get to know the business and work out a custom solution that meets every need- financial and otherwise.  

Benefits that beat the competition

Like any businesses, the many small businesses with whom we work need to be competitive with other organizations when it comes to their health and wellness offerings. In fact, this is the number one concern that is raised when we are first meeting with a new client. They need to be able to attract the right people, and offer comprehensive benefits.

Often businesses think a great benefits plan is something they cannot afford if it is to be meaningful. Employers and employees alike often share the misconception that the benefits programs offered through the public sector or through massive corporations are superior and unattainable.

This is simply not true; affordable and effective solutions exist. We have been able to achieve this by the creation of unique, broker-manage pools (link to Immix pool blog).  It has been our experience that if there is a commitment to health and wellness, we are able to implement programs for these organizations that check every box.

Benefits and COVID19- what’s happening?

As we have navigated this pandemic and the associated shutdown of so many of our client’s businesses, we have seen the commitment to their employees reflected every step of the way. We’ve seen careful consideration of layoffs, extension of benefits during layoff, and a concern with mental and physical wellbeing and continued access to resources. We have helped our clients navigate their options and implement solutions.

Our insurance carrier partners have also stepped up, and premium relief measures were quickly introduced. Our strong relationships with our clients and suppliers has meant clear, quick and concise communication every step of the way.

Small businesses working with small businesses  

The pandemic has reaffirmed our decision to remain an independent firm, in a changing benefits landscape. We firmly believe that employee benefits programs are not a commodity; they require custom care and attention, and an engaged consultant that understands your business.

The landscape is changing, more over the last year than ever. Benefits consulting firms similar to ours have been part of an acquisition fever; large companies buying up other small, medium and large companies. For the Immix Group, despite the industry climate and opportunities, we feel staying independent is a major advantage. In short, it better aligns us with our clients.

When it comes to our small business community, the question we feel so heavily is ‘what can we do to help?’

The many articles on small businesses that you have likely been reading have a common thread: a plea for customers to continue buying from them. While we have no direct control over the re-opening of the economy, we can control our own personal spending and for some of us, our business spending.

So, at a personal level, buy from small businesses, when you can. Purchase a gift card now, to be used later. If you are a business, buy from and partner with other small businesses, when you can. As the stats show us, these are your neighbours, your friends and family, and most likely, your employer.  

We are all hopeful that businesses will be able reopen and thrive, even if under new rules and restrictions, but nevertheless, resume building, creating and providing valuable services.

If you would like to explore implementing a benefits program or reviewing your existing plan, we would love to help! Please contact us at 604-688-5559.  

* Government stats; latest data available is for 2018 https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03114.html