The Canadian dollar has fallen to its lowest value since 2004, prompting a wave of concerned analysis from economic experts. The dollar, recently valued at 77 cents USD, remains highly vulnerable to oil price movements – impacting the confidence level of both Canadian consumers and the small businesses they frequent.
The weak dollar is, of course, a challenge for small businesses at home, and for importers, especially of goods from the United States. However, falling exchange rates create economic effects that some small businesses may be able to take advantage of, particularly in specific sectors like tourism, accommodations, online retail and any business with an eye on markets outside Canadian soil.
In 2013, the top six cross-border markets purchased over six billion dollars worth of Canadian goods and services, a large quantity of which was sold through online channels. Despite this, very few Canadian small businesses are fully e-commerce ready – 20 percent or fewer. With the dollar at historic lows, now may be the time for Canadian businesses to explore online outreach and digital/social marketing targeted at key foreign markets, especially those to the immediate south of our borders. Due to the flexible and broad reach of digital marketing and online commerce, the overhead associated with approaching international markets has been significantly reduced. If the investment of time and capital into building an e-commerce portal is too great, consider turn-key alternatives such as Ebay and Etsy.
In the height of the summer, Canadians with vacation plans abroad are increasingly turning to domestic destinations to help their money go further: this has resulted in a recent surge of profitability for businesses in the hospitality sector and those located in tourism-friendly hot spots. Additionally, visitors from the United States and other out-of-country locales may find Canadian destinations a high-value proposition for their own travels. Is your business ready for a potential influx of out-of-town visitors? Consider the potential need to add inventory or staff to meet reinvigorated demand.
Though the summer season is in full swing for many small businesses, the dollar’s troubles may play out over the longer term. Ensure that your business is insulated against the effects of currency value adjustments by planning adjustments to your business model well in advance. As economic conditions change, consumers are likely to turn their attention and their spending power to local and domestic goods and services such as those provided by small businesses across the country. Establishing a strong Canadian business community will help support the economy in the long run.