Dollar decline has SMEs worried: CIBC
Poll finds manufacturers are the most concerned
TORONTO — More than one-third (36%) of SMEs are worried about the impact the falling Canadian dollar will have on their businesses, yet 65% have not taken any steps to protect their companies from currency fluctuations, according to a CIBC survey.
Manufacturers are the most concerned about the falling dollar (53%), followed by wholesale/retail businesses at 44%, and importers (86%) are the group most likely to be concerned.
“Many small businesses have become accustomed to a strong dollar, which may explain why many have not considered steps to protect their cash flow and react to the dollar’s decline,” says Shelley Swanlund, CIBC’s vice-president of business banking and head of small business.
According to Industry Canada, small businesses contribute as much as 41% to Canada’s GDP.
Some owners are raising prices or cutting costs to adapt. Most popular actions include reduced spending (14%), pricing alterations (13%) and sourcing new or alternative clients or suppliers (10%).
“Reducing spending or raising prices are a natural reaction to dealing with a change in cash flow, but may not be sustainable in the long run,” says Swanlund.
Here are some tips:
• Have a currency plan.
• Monitor that plan on an ongoing basis and make adjustments.
• Build flexibility into your business model. Be sure your business can withstand temporary fluctuations in cash flow by having access to an emergency reserve fund, whether it’s accumulated savings or a line of credit.
The web poll was conducted by Leger among a representative sample of 500 owners or decision-makers in Canadian companies with 500 employees or less.