Hold on to your hats: according to the Canadian Federation of Independent Business, small business confidence dropped in July to its lowest level in six years.
Small business confidence is now at a point just below the marker that indicates zero real GDP growth: July’s score of 58.2 indicates that while a slim majority of business owners are showing optimism about their performance over the next year, broader economic indicators are more pessimistic in nature. Index levels normally range between 65 and 70 when the economy is growing at its potential.
Despite this sobering news, the words of the Hitchhiker’s Guide to the Galaxy come to mind:
Small business confidence as calculated by the CFIB barometer is highly sector-dependent. Businesses in the resource sector for example, account for a major proportion of the score’s decline in recent months. As economic effects trickle from sector to sector, they can be managed with specifically targeted plans made with situational foreknowledge that will help individual businesses weather any financial challenges.
Innovative small businesses in Canada can even find new opportunities during times of economic turbulence. For example, expensive equipment is often available at wholesale prices when the economy is slumping, and struggling corporations who are forced to exit the market leave more room for small businesses to fill the void.
Small businesses are uniquely positioned to take advantage of cost-saving measures that can have immediate and direct effects on day-to-day operations rather than requiring several business cycles to see meaningful improvement. Low-impact technological innovations and agile management practices allow small businesses, traditionally highly sensitive to variations in consumer demand and broader economic conditions, to balance more easily through the inevitably cyclical progression of macro boom and slowdown.
The financial technology sector and the availability of working capital and business loans during these periods must also be considered. As businesses feel the need to maintain operational stability, enabling access to capital in a fast and fair way will become increasingly important.