Almost a third of Canadian small business owners raised prices by more than 10 per cent in 2022 to offset rising costs, a survey found – and the trend is continuing this year.
The survey by Ownr, a small business and legal management platform backed and operated by RBCx, found that so far in 2023, more than 23 per cent of small business owners have raised prices by more than 10 per cent.
“The two major concerns for entrepreneurs right now are both cash flow issues and then the backdrop of inflation,” said Derek Hopfner, chief revenue officer at Ownr.
Inflation has been moderating from last year’s highs, but remains elevated, with a reading of 4.3 per cent in March. Meanwhile, the Bank of Canada is holding interest rates high in its bid to fight inflation.
Some of the other pressures most acutely facing small firms right now are labour supply and cost, borrowing costs and supply chain issues, according to the Canadian Federation of Independent Business’ monthly Business Barometer index report.
Though it’s a difficult decision for a small-business owner to make, Mr. Hopfner said eventually entrepreneurs have to translate those concerns into higher prices.
“There is this kind of balance between what makes sense from a margin perspective as a business owner, and then making sure that you’re able to attract customers as well,” he said.
Mr. Hopfner said he’s seeing more people start businesses as a reaction to economic uncertainty so they can make additional income.
“It’s really interesting to see both if you’re operating the business already, how you react to (inflation), but what you might do if you’re not operating a business yet, and how you might choose entrepreneurship as a path for supplementary income,” he said.
Almost a quarter of the small business owners surveyed said they started their business as a way to make additional revenue, a number Ownr said is increasing from previous surveys.
Natasha Acuba-Bailey is one of many entrepreneurs whose side hustle has turned into their full-time job. Ms. Acuba-Bailey launched Burnaby, B.C.-based Telly’s Manila Kitchen in 2020, selling jarred adobo flakes, a Filipino food, featuring her grandmother’s recipe.
At the beginning of 2022, Ms. Acuba-Bailey decided to leave her job in retail and make Telly’s her main gig.
Since she took that leap, inflation has soared, sending the costs of materials and raw ingredients up with it. For example, she said the cost of the pork shoulder she uses in her recipe has gone up significantly.
Ms. Acuba-Bailey said she has been shopping around more to find deals and buying more products in bulk to combat the effects of rising costs on her business.
She didn’t raise her prices last year as she was ramping up her business, but said she’s probably going to this year.
“I see my other fellow small businesses increasing their prices,” she said.
“We’re consistently thinking about it, we’re fielding feedback from our clients.”
Ms. Acuba-Bailey said she thinks customers will be understanding when prices do go up, as they already were when she started charging for local deliveries this year to offset rising transportation costs. After all, customers are facing rising costs too and will hopefully understand, she said.
But despite the current economic environment, almost half of the survey respondents said they are feeling more optimistic about their business plans now than six months ago.
Ms. Acuba-Bailey said though she knows customers have been feeling the pinch, she gets the sense that people want to support local, small businesses during difficult times.
“I’m still very hopeful,” she said.