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Source: Panumas Yanuthai, Shutterstock
Summary
- Nearly 51.3 per cent of the businesses in Canada are unsure for how long they will survive before filing for bankruptcy.
- A quarter of the businesses in accommodation and food services industry say that they can only sustain the business for up to one year before shutting down the business forever.
- A decline in profitability is also expected with nearly 42 per cent businesses bracing themselves for it in the next three months.
As the COVID-19 pandemic crisis continues to affect markets and day-to-day business operations, Canadian companies fear that they might not be able to survive this public health crisis. According to the "Canadian Survey on Business Conditions, first quarter 2021" by Statistics Canada, 51.3 per cent of the businesses say that they don't know how long they can continue running the business before considering shutting down the operations or filing for bankruptcy. Notably, 10.3 per cent of businesses claimed that they can only run the operations for less than a year.
Uncertainty looms majorly over accommodation & food services industry
Due to the lockdown and social-distancing norms, the accommodation and food services industry was affected badly. About 86.4 per cent of businesses in this industry reported a fall in revenue in 2020 as comparison to the previous year.
Another sector, that is similar to this industry is the arts, entertainment and recreation. Nearly 78.3 per cent businesses in this segment also witnessed a decline in revenue.
Not only this but around three-fifth (61.5 per cent) of the businesses in the accommodation and food services industry and 54.8 per cent in arts, entertainment and recreation reported a fall in their revenue by at least 30 per cent year over year.
A quarter of the businesses in the accommodation and food services industry say that they can only sustain the business for up to one year before shutting shop forever. More than 23 per cent of businesses in the arts, entertainment and recreation industry echoed similar sentiments.
What's in Store?
- Canada lost three million jobs during the peak pandemic months, regaining some in the last couple of months. However, it seems that was not the end. The survey suggests that 46.4 per cent of the businesses said that they don't know how to survive without the layoffs. More than one in five claimed that they have less than a year before they start the process of layoffs.
- A study conducted by the Canadian Federation of Independent Business (CFIB), suggests that small businesses have been affected badly in the country and they may shut down the business operation soon. This may result in job losses of around 2.4 million people.
- A decline in profitability is also expected with nearly two-fifth (41.8 per cent) of businesses bracing themselves for it in the next three months. One-third of the companies are also foreseeing a decline in sales over the same period.
