Survey predicts challenging business future
Initial results from a survey of local businesses conducted by the Salt Spring Chamber of Commerce are in, and the future is not looking good for many of those who responded.
The chamber and the Salt Spring Community Economic Development Commission partnered on the survey to gauge the impacts of COVID-19 and to help with recovery planning. Among the 96 responses received, representing nearly 15 per cent of local businesses, 40 per cent said they would not survive the current crisis.
Salt Spring Chamber of Commerce executive director Jessica Harkema said the findings are significant because survey participation reached across all sectors, rather than focusing on any one area.
“What was a little shocking to us is 60 per cent of the respondents are closed or not operating at any capacity,” Harkema said.
The associated impact on local employment from just the 15 per cent participation group includes 270 employees that have been laid off. More loss of employment can be attributed to contract positions and to seasonal hires that would normally have taken place this spring and summer but now will not happen.
“Everyone has been hard-hit,” Harkema said. “Businesses with big operating budgets and that are personnel-heavy are particularly feeling it and also may have the highest risk for their businesses, but it’s affecting everyone.”
Harold Swierenga, a retired professor of economics, said even if some things start to reopen this summer he doesn’t expect a quick recovery process with the island economy so heavily weighted toward tourism. Businesses and events that require large groups of customers to make it, whether restaurants or festivals, will not have the uptake they need during 2020.
“Anything that requires a crowd, I think that kind of thing will take a while,” Swierenga said. “What it does to the Saturday market is not going to be good, even if they do reinstate it.”
Harkema said survey results show many island businesses won’t benefit from the federal and provincial supports on offer. Many are also finding it difficult to find the information they need to apply, and may be misunderstanding the programs offered and/or their eligibility.
Reductions to the schools portion of commercial property taxes are one example of an area of confusion as to how much relief that might actually bring to property owners and how it might be passed on to tenants. Programs based on loans are another dubious benefit, if local business owners even qualify. Harkema said island entrepreneurs need grants, not another expense to pay.
The survey results further suggest the Canada Emergency Relief Benefit of $2,000 per month has hurt local companies’ ability to hire part-time staff, who would actually make more money staying home. The program whereby the government will pay 75 per cent of wages in order to keep valuable employees working with their current employers may not have much more uptake.
“Most of the businesses on Salt Spring have said it won’t really help because they’ve been forced to close or aren’t viable,” Harkema said.
Since many local entrepreneurs either rely completely on the busy summer season or enjoy a natural boost to business during that period, supports will be necessary through the winter to survive the slow-down even if the pandemic measures that closed businesses have passed.
Swierenga observed previous hard times like the 2008 recession did not impact transportation to the same degree, so economic recovery was able to take a quicker turn back to normal than can be expected in this event. He foresees a slower return of visitors who travel to self-contained cottages or second homes and stay put there, first.
“I don’t see a steep recovery curve. I think from a tourist standpoint the summer is going to be very slow,” Swierenga said.
Harkema noted Salt Spring is unusual for its high number of businesses and the services it has that are not sustainable through the local population’s buying power alone. New business models may be created as people innovate and change to meet the current scenario that will help shift that imbalance.
“We’ve always been talking about lowering the severity of our boom and bust seasonal economy,” Harkema said.
Survey data is still in “raw” state and Harkema will need some time to stream it into a comprehensive report. That information will be valuable when it is ready, both for the immediate need being addressed by the multi-agency COVID-19 Business and Farm Response and Recovery Task Force, and for a longer-term strategy for a more resilient island economy.
The first recovery phase will likely last from one to two years, Harkema said.
“Part of what this data will do is give us ammunition for advocacy with the government when we go back to normal,” Harkema said. “We know all regions are suffering right now, but our unique island economy means we have an income boost for four or five months of the year and then we go into hibernation. So, the survey will help identify our unique island needs.”
Survey data will also help with longer-term resilience planning, which Harkema envisions will take place in years three to seven after the pandemic passes. The information could guide strategy for building an island economy that is not so tied to one season. Ironically, accommodation tax revenue from the new Southern Gulf Islands Tourism Partnership had been earmarked for promoting non-peak-season tourism in the islands.