Even with the lingering effects of the COVID-19 pandemic, surging interest rates, and concerns of a looming recession, a majority (71%) of Canadian small business owners and self-employed professionals are confident their businesses will thrive for the remainder of the year.
That’s according to a new survey by small business insurance provider Zensurance, conducted in partnership with the Angus Reid Forum.
Despite this optimism, nearly 60% of respondents admitted that the state of the economy had negatively impacted their businesses during the first half of 2023.
Among the top concerns shared by Canadian business owners, 89% cited inflation as their primary worry, followed closely by rising interest rates (80%), the necessity to raise prices (80%), and the escalating cost of gasoline (78%).
Moreover, the Zensurance survey revealed regional disparities when it comes to how owners perceive economic effects on their businesses.
According to the survey, 24% of respondents in Ontario said the state of the economy has negatively impacted their businesses, compared to 12% in British Columbia and 10% in Alberta.
“Our latest survey results clearly show that Canadian small businesses are grappling with managing their costs in a challenging economy, but it also shows they are optimistic, resilient, forward-looking business owners,” said Danish Yusuf, founder and CEO of Zensurance.
“It's critical to understand that the financial health and wellness of any business owner's or self-employed professional's business is contingent on safeguarding themselves against the myriad of liability risks they face.”
The survey showed Canadian small business owners recognize the importance of proactive risk management. Notably, 63% of respondents cited mitigating their liability risks as a top priority, compared to 37% who said that they do not give it significant consideration.
In terms of tangible risk mitigation efforts, 83% of business owners said they keep a first-aid kit on hand, while 79% said they regularly conduct maintenance on tools and equipment. Additionally, 74% said they perform routine upkeep on their commercial properties.
As for business insurance, 87% of respondents reported being insured. Among those without insurance, 48% believed they didn't need it, 30% relied on personal home and auto insurance, and 19% either hadn't considered it or deemed it too costly.
“Some small business owners’ perspectives on why they don't have a business insurance policy are concerning,” said Yusuf. “No small business or independent professional is immune to the threat of a lawsuit or an expensive accident.”
“They may not be aware of the risks they are taking that could prove to be financially catastrophic to them. For example, the cost of a lawsuit – even a frivolous one – or an unexpected event like a fire damaging or destroying a business property and all your inventory far exceeds the price of a commercial insurance policy by as much as 200% or more.”
Zensurance’s survey also delved into how small business owners approach insurance purchases, with 46% of respondents stating that they shop around for insurance rates annually, while 22% did so every few years.
Moreover, 8% reported never shopping around, and 5% only did so when their business circumstances changed.
When it comes to the decision-making process, business owners said they consider factors such as cost (28%), customized coverage (16%), financial protection (12%), and ease of acquisition (9%) playing pivotal roles.
The influence of advisors, mentors, and peers was identified as another key factor in their decision-making, with 24% citing the role of insurance brokers, 21% attributing their choice to mentorship, and 15% acknowledging recommendations from family, friends, or colleagues.
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