Inflation is putting pressure on Metro Vancouver businesses
The Canadian Survey of Business Conditions suggests owners and founders are anticipating a sharp rise in costs.
It’s never an easy job to run a business. That task, founders and owners say, is about to become even harder.
Inflation tops the list of expected challenges for businesses in Metro Vancouver, according to new data from the Greater Vancouver Board of Trade (GVBOT) and the Business Data Lab at the Canadian Chamber of Commerce.
The Canadian Survey of Business Conditions found that the top five obstacles Metro Vancouver businesses anticipate in the next three months are rising inflation (60 percent); rising cost of inputs (47 percent); rising costs in real estate, leasing, or property taxes (40 percent); recruiting and retaining skilled employees (38 percent); and rising interest rates and debt costs (38 percent).
Over half of businesses surveyed expect an increase in operating expenses in the coming quarter, while more than a third expect a meaningful decline in profitability and cash reserves.
As interest rates have risen following the post-pandemic economic downturn, local business owners are experiencing increased pressure on the costs of inputs, borrowing, and expenses in all categories. That rise is making it more expensive to run daily operations – and companies are passing the costs onto consumers.
Those financial issues also spell difficulty for the wider tech industry. B2B SaaS companies – an innovation category that has traditionally been successful in Vancouver – will likely feel the pinch, as less money is available to businesses hoping to upgrade their workflows with new tools. Local hardware companies are also vulnerable, given the amount of capital required to design and build products and the decreased purchasing power of businesses.
“All of these cost increases are making it more challenging for businesses to implement new technologies or make long-term investments,” said Bridgitte Anderson, GVBOT president and CEO. “As operating expenses go up and profitability expectations go down, business owners are certainly feeling the squeeze.”
Rising inflation also spells problems for recruiting and retaining talent. An issue that plagues the local industry in even a rosy economic climate, recent increases in the cost of living have employers shelling out more on staff – a problem that’s been exacerbated by the rise of remote work and more attractive salaries from U.S.-based companies. The GVBOT, which has been critical of B.C.’s 2023 Budget, suggests that the provincial government is not doing enough to help local businesses.
“Employers are increasing wages for new hires, paying existing employees more, and offering different kinds of training and benefits incentives to recruit and retain talent,” said Anderson. “Attracting employees with the technical skills to help their business thrive continues to be a huge challenge for business owners.”
The Canadian Survey on Business Conditions data was collected from 739 employers in Metro Vancouver, between January and February of this year.