Small B.C. businesses get creative trying to survive inflation

Rising costs fuelled by inflation are pushing many small businesses in B.C. to find creative ways to adapt or pivot in the hope they can weather the storm.

Even though inflation has fallen from its four-decade high over the last year, prices for many things have not. And it’s not just consumers who are struggling. So are entrepreneurs, who find themselves forced to pass on their higher costs.

“In my memory, this is the hardest season I’ve ever experienced in this business,” said Sarah McClean, the owner of two restaurants in Powell River, B.C. “My fear is that it’s not a season.”

Her two businesses — Coastal Cookery and Costa Del Sol restaurants — employ roughly 100 staff between them. She laments having to close a third restaurant during the pandemic, which employed about 25 people, although she said almost everyone got work in her other establishments.

She said freight and fuel surcharges increased 64 per cent this year, when most restaurants are already operating on razor-thin margins.

“I remember 2008-9 in this business and that crash, and there’s just nothing that’s compared to these last few years,” she said. “COVID actually feels easier than what we’re trying to weather right now because inflation is everywhere.”

Mortgage, food costs keep biting as inflation creeps up again

Canada’s overall annual inflation rate ticked up to 3.3 per cent in July, from 2.8 per cent in June. Homeowners now pay 30 per cent more in mortgage interest than 2022. And while food price increases have dipped slightly since June, they’re still painfully high.

But as many businesses wrestle with shrinking sales, higher costs and now, increased interest rates as Ottawa attempts to keep inflation down, many say it’s taking everything they have just to survive.

For McClean, that has meant raising menu prices to offset the cost of raw ingredients — but even that doesn’t always work.

“It’s sickening to charge $21 for a burger and know that … it’s a loss leader,” she said. “When was a burger and French fries a loss leader?”

She says it also means she’ll have to work the floor of her restaurants a lot more in order to cut costs.

Owners working the floor

According to the most recent data, Canada’s inflation rate was 3.3 per cent in July. That represents a slight rise, after 15 months of decline from its 39-year record of 8.1 per cent in mid-2022.

Owners having to get their hands dirty is the new reality for a lot of small businesses during periods of high inflation, according to Ross Hickey, an associate professor of economics at the University of B.C. Okanagan.

“Inflation’s come down quite a bit since its peak over the last year, but … just because inflation is dropping, does not mean that the prices go back to normal,” Hickey said. “Prices remain high. And with these high prices and the high interest rates, that’s affecting consumers.”

Hickey said small business owners will likely be forced into painful decisions such as cutting staff, shortening hours, or raising prices, all of which risk driving customers away.

“They’re going to find themselves working more, unfortunately,” he said. “They’re going to be working harder and longer hours than they previously were able to.

Pivot and diversify

Some entrepreneurs are seeing opportunity in the crisis, even though it means more work and taking risks.

Kevin Lowe, the owner-operator of C-Clear Auto Detailing in Lake Cowichan, B.C., says he’s never seen so many customers cancel their appointments as in recent months — many of them with the excuse that “an unforeseen bill” came up and they didn’t have any cash left.

“I started to think, ‘This is a bigger problem starting to cascade over. People are obviously desperate … trying to save money where they can.”

He says he realized that he would have to accept less revenue, especially as he watched other local owners in his industry close their doors. So, despite rising costs, he lowered his prices to be more competitive.

Then, he went back to school — studying counselling. He also took on side jobs, including as a youth worker and evening home-care worker.

“I’m not going to make as much money, so now I have to get more income from somewhere else. My advice to anybody who’s really struggling is to use this as an opportunity to really become creative … Use this as fuel to get out of a bind.

“It gave me an opportunity to think like, what do I really want to do?”

Become a ‘community hub’

High inflation isn’t the only worry for many B.C. businesses. A looming federal deadline has many increasingly worried. Ottawa has set Dec. 31 as the deadline to pay back the Canada Emergency Business Account (CEBA) loans that kept thousands afloat through the pandemic.

The Canadian Federation of Independent Business estimates that four in five businesses in the province have not yet been able to repay their loans. With less than four months left, recipients who miss the deadline will lose access to partial loan forgiveness, and their loans will start accruing five per cent interest.

For the owners of the Brentwood Bay Village Emporium — a café and general store — the rising cost of supplies and customers buying less have made it harder to pay back their federal loans on time.

“With inflation and wages having gone up, our margin has all but disappeared now, and it means that we’re struggling to find ways to make our CEBA payments,” said co-owner John Carswell.

But the crisis has also forced creativity. The small shop employs 16 local residents, most of them working part-time, which has offered more flexibility to keep costs down during quieter business hours.

The shop now hosts weekly concerts, a bookable events space, art displays, and added online catering orders. He’s also started picking up his own dairy and other products and cutting back on services he used to pay for.

“As it turns out, COVID was relatively easy for us to get through compared to what was waiting for us on the other side,” said Carswell. “One of the keys to resilience for small businesses is to create the connections in our community.”

To that end, he says he had to start thinking more like a social enterprise than an entrepreneur.

And it meant seeing former competitors as potential allies. He meets regularly with a group of similar business owners for mutual support.

“The way that we’re going to survive is by reaching out to our community, and that creates a support system for them and also a support system for us,” he said. “So we serve them … We’re creating a hub here for our community.”