If you had wandered into Julie Yoo’s boutique consignment store on a sunny weekend in the Time Before COVID-19, you’d have found yourself brushing up against a dozen or so other shoppers scoping out resale luxury handbags, designer dresses and high-end jewellery. Since opening I Miss You Vintage more than 15 years ago, the 44-year-old entrepreneur has turned her business into a fixture on Toronto’s bustling Ossington Ave. and a favoured haunt of celebrities and designers passing through the city.
In March, Yoo was gearing up for yet another busy spring fashion shopping season, but it never happened. At least, not in the way she envisioned. With her store deemed non-essential and ordered to close amid the pandemic lockdown, Yoo spent the next month with her small staff photographing and cataloguing every item to sell over the internet. She’d already taken small steps into the e-commerce world, but now she converted one of the shop’s three rooms into a photo studio to keep pace with surging online sales. Then, when another luxury consignment shop shut its doors, Yoo snapped up $500,000 of its stock to add to her offerings.
“The workload is more now—I work 100 hours a week—but we’re doing similar to or better than before,” she says. “I’m one of those people who looks at the cards I’m given and adapts, and this whole thing has been an exercise in adapting and finding creative ways to survive and reinvent your business.”
Yoo’s journey is a microcosm of the gruelling ordeal thousands of small and medium-size businesses have endured during the pandemic. Almost no sector of the economy escaped unscathed, but small and medium enterprises (SMEs) were unduly impacted by physical distancing and lockdown measures meant to slow COVID-19′s spread. Yet it is precisely the ingenuity and resilience of small businesses that we should look to to guide Canada through this grim period. Ultimately, SMEs will determine the speed and vibrancy with which Canada’s economy rebuilds.
The importance of small businesses in Canada’s economy can’t be overstated. We may think of them as mom-and-pop shops, but SMEs also include manufacturers, contractors, transporters and finance firms. Many tech startups count, too.
Prior to the pandemic, seven in 10 workers got their paycheques from small businesses (those firms with fewer than 100 employees). When you add in medium-size companies (between 100 and 500 employees), that share of the labour market climbs to 80%. At the same time, small businesses have steadily become bigger drivers of economic growth, accounting for 42% of GDP in 2016 (the most recent year for which Statistics Canada has figures), up from 40% in 2011. Over that same period, large companies saw their contribution to GDP shrink from 49% to 44%.
Which is why COVID-19′s gut punch to the SME sector has been so troubling to watch. Small businesses bore the brunt of the economic damage—Statistics Canada found that in the first quarter, real GDP shrank by 2.1% for small companies, compared to a 1.5% decline in output for big companies. A large reason for that disparity lies in the unequal treatment small businesses faced from lockdown restrictions. While giant retailers like Walmart and Costco stayed open, selling TVs, pants and toys alongside essential groceries, most small stores were deemed non-essential and had to close.
And yet SMEs have led the early stages of the recovery. Since March, these businesses expanded their number of employees nearly twice as fast as those with 500 or more workers. Small businesses with fewer than 20 employees are building back even faster, adding 547,000 jobs compared to 73,000 at large companies.
It takes a certain type of individual to face a crisis like this pandemic and spot opportunity. Then again, the entrepreneurs who launch small businesses are, by their nature, risk takers and innovators.
The path back will not be without its challenges. The Canadian Federation of Independent Business’s monthly survey of its members in October found intense anxiety surrounding the uncertainty of a second-wave lockdown. The share of small businesses that were fully open slipped to 66% from 72% two weeks earlier. But renewal is happening. We can choose to dwell on the 298,000 businesses that have closed permenantly since March or on the 215,000 businesses, most of them SMEs, that entrepreneurs have launched to replace them.
Recessions are often likened to wildfires that destroy whatever is in their path but create the environment necessary for new forests to grow back stronger. Now, as they have always done, small business entrepreneurs are planting the seeds that will rejuvenate Canada’s post-pandemic economy.
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