For most businesses, 2022 has been a tumultuous time. And as the year winds down, the Greater Vancouver Board of Trade and the Canadian Chamber of Commerce’s Business Data Lab published new research indicating that 2023 could very well be more of the same -- at least at the start of the year.
In the latest edition of the Canadian Survey of Business Conditions, published on Monday, five key issues were identified as expected obstacles in the next three months, largely continuations of those experienced in the past year.
Rising inflation was cited as an obstacle by 55% of respondents -- the highest amount out of any of the issues identified. Then, 44% of respondents identified the rising cost of inputs, 43% identified interest rates and debt costs, 36% identified rising costs associated with real estate, such as leasing and property taxes, and 36% identified recruiting skilled labour.
Respondents were also asked to identify changes they are anticipating in the next three months. Operating expenses increasing was identified by 48% of respondents, a decrease in profitability by 47%, a decrease in cash reserves by 38%, a decrease in operating income by 32%, and raising prices to offset costs by 30%.
Furthermore, 37% of businesses said they are "very likely" to pass on cost increases to consumers, while 28% said they were "somewhat likely."
Zooming out, businesses in BC were noticeably more pessimistic about their future outlook over the next 12 months compared to those in the rest of Canada. The survey found that 27% of BC businesses said they were pessimistic, while only 18% of businesses in the rest of Canada shared the feeling.
"The labour challenges and borrowing costs of the past year are beginning to manifest in a liquidity crunch that will put many of the businesses still carrying significant debt from the pandemic at risk," said President and CEO of the Greater Vancouver Board of Trade Bridgitte Anderson. "We need governments laser focused on reducing barriers associated with doing business in our region and creating efficient permitting processes, not increasing costs and fees."
"Persistent labour shortages and difficulty finding skilled workers will be compounded by a looming wave of retirements to create a truly challenging business environment," she added. "It will take a coordinated effort from the business community, education sector and governments to ensure that we have the skilled workforce our region needs to thrive."
On the labour front, 74% of respondents said they have plans to increase compensation in order to attract and retain talent. But when it comes to those exiting the workforce, however, 36% of respondents admitted they currently have no plan in place to address expected retirements.
The Board believes that addressing these labour challenges could be what separates businesses that find success in the coming year from those that don't, concluding that "with businesses in every sector experiencing the same challenge, organizational ability to recruit and retain talent will be a key determinant of success in 2023."
The findings from the Canadian Survey of Business Conditions, which was created in spring 2020 by Statistics Canada and the Canadian Chamber of Commerce, are used by governments and the industry to monitor business conditions and inform policy decisions. The Board did not say how many respondents were involved in the Q4 survey, but said 748 employers in Metro Vancouver were involved in the Q3 edition.