A new report from Ownr says the COVID-19 pandemic caused many entrepreneurs to change their business models, and move online.
Once the pandemic is over, 46.1 percent of entrepreneurs do not intend to open a physical retail location, according to the survey titled Entrepreneurship Revival Report 2021, and released on August 17.
A further 31.5 percent indicated they are uncertain about opening a retail store, and will decide whether or not they should based on their company’s growth.
“Many new businesses were born online while small business owners focused on investing in building their digital presence.”
“Amid widespread lockdowns across the country, many new businesses were born online while small business owners focused on investing in building their digital presence,” according to the survey.
Ownr, a business formation and legal management platform, found that three out of four (76.9 percent) of entrepreneurs said their businesses had an online presence, with 46.6 percent of entrepreneurs operating both online, and brick-and-mortar.
Overall, entrepreneurs whose businesses operated exclusively online made up 30.3 percent of the people Ownr surveyed. Of those, more than half (56.4 percent) do not plan to open a physical retail location in the near future. The report said that pointed to a “potential risk in the revival of the vibrant storefronts that make up our communities.”
The report recommends a robust support system for entrepreneurs, from loyal patrons to adequate government resources, to help “build up confidence and rejuvenate our communities.”
The survey, conducted between July 5 to 16, captures the responses of 806 participants who use Ownr. Every participant is either an existing entrepreneur or will soon launch their business. The results of this report have an estimated three percent margin of error.
In general, more than half of entrepreneurs (54.6 percent) surveyed held corporate jobs before launching their own businesses, pointing to a positive shift in the perception of entrepreneurship as a source of income and employment.
“Entrepreneurs are among the most resilient members of our business community. They are the people we aspire to be,” said Shadi McIsaac, CEO and co-founder of Ownr. “As we look towards economic recovery, it’s clear that Canadian entrepreneurs are still uncertain about the future and they might need some continued assistance to keep their businesses afloat during this challenging time.”
The three top industries in which entrepreneurs lost customers during the pandemic were in retail (16.6 percent); professional and scientific services (10.7 percent); and in the arts and entertainment sector (10.2 percent). Of the entrepreneurs surveyed, 27.3 percent said they lost customers because of COVID-19.
Entrepreneurs who gained customers in the pandemic (26.7 percent) said over the last six months they’d invested in technology, professional services, and advertising and marketing.
The survey found that nearly every entrepreneur who lost a customer is worried that future lockdowns, and an uncertain economy will present them with challenges. Their biggest concerns revolved around running out of money, and changing customer preferences.
“Ownr data has provided remarkable insights into how the pandemic has influenced the perception of future opportunities and hurdles among entrepreneurs,” said Shane Murphy, chief operating officer of Ownr.
Ownr is operated by RBC Ventures Inc., a subsidiary of Royal Bank of Canada.
While the Ownr report might paint a bleak portrait of the economy, the Bank of Canada’s recent summer Business Outlook Survey offers a more optimistic view. Published in July 2021, the survey said firms tied to high-contact services still face challenges, but are becoming more confident that sales will pick up as vaccination rates rise.
As well, the Bank of Canada survey said that most firms reported an improvement in their sales prospects from a year ago. The report noted that “Indicators of capacity pressures and labour shortage intensity have increased, reflecting stronger demand and tightening labour markets, sometimes from low levels.”
The Bank of Canada report indicated that plans to invest in and hire staff are widespread as businesses prepare to meet expected sales increases.
An April survey from Intuit Quickbooks reported that despite the many challenges faced by Canadian businesses throughout the COVID-19 pandemic, entrepreneurship and new business creation were strong over the last year.
Intuit polled approximately 2,000 Canadians (589 of whom identified as entrepreneurs) about the impact of the COVID-19 pandemic on their businesses, barriers and motivations to entrepreneurship, and how businesses are embracing digital tools.
“Entrepreneurship has continued to grow since the beginning of COVID-19, both because of and in spite of the challenges it presented,” the report read.
One in five (21 percent) of Canadians surveyed said they started their business during the pandemic. This reflects approximately two million Canadians, according to Intuit. The number is notable compared to past years, as in 2018 a BDC report found about 44,700 Canadians started a business, which it reported at the time as the highest number in a decade.