Small Business Resource HUB
The Covid-19 Virus
Yes – we got blind-sided. Perhaps it was nature’s way of giving us a wakeup call. Who knows!
Notwithstanding the personal disruptions and lives lost to this hideous disease, which is a tragedy in itself, but this is about the concerns of small businesses in Canada.
First of all, kudos to the Federal Government for stepping up and providing financial relief to those who, due to no fault of their own, have suddenly found themselves without employment.
However, the Government once again demonstrated that it has no clue when it comes to small business.
To the Federal Government, a business is one that employs people – lots of people – tax paying people. Why? It’s from the income taxes paid by employees that the Government derives a significant portion of its revenue. During this sudden Covid-19 crisis, the Federal Government suddenly faced a considerable loss of revenue due to mass layoffs. To stem the tide, the Government consequently opened up its reserves and offered funds to businesses to pay their employees.
Just as a point of interest – people were laid off because there was no work for them, so what would be the point of giving money to a business to pay someone to sit around and do nothing. But that’s how Governments think.
But what about those businesses that DO NOT have employees?
Tough! They didn’t qualify for any employments subsidies.
The Retail and Restaurant industries, in particular, were hit hard. They were ordered to shut down due to ‘distancing’ concerns. Eventually, the Federal Government was pressured to help these businesses. Since these businesses were crying the blues about being unable to ‘pay the rent’, the Government stepped in and offered to pay part of the rent but only with the co-operation of the landlords. This may have levitated some pressure, but it is yet another example of how little the Government understands small business. The Government took the term ‘Pay the Rent’ a little too literally, not realising that it is a generic euphemism used to mean ‘overheads’ or more bluntly – ‘pay the bills’. Yes, the rent is usually a large part of those overheads – hence the term, but what about home-based businesses?
Working from home means there is no rent to pay, so it would seem once again that these businesses did not qualify.
A Failure to Understand
What the various levels of Federal Government fail to understand is – just because there is a sudden lack of income, it does not mean the business overheads miraculously evaporate. These overheads include such things as – phone bills, internet services, website hosting, insurance premiums, software subscriptions and updates, accounting fees, advertising, loan payments – the list goes on. In the meantime, these overheads are not going away. Eventually, all savings will be exhausted, at which point all will be lost. And then – these business owners will still not get any financial help because as of to date, there are still no plans in place to help them, despite assurances that the Government is there to help ‘everyone.’
The Importance of the Small Business
Sadly, the Federal Government continually demonstrates that they neither understand nor appreciate the part these small businesses play in the overall economy of the country. They are, however, all too happy to collect income tax or corporate taxes from these businesses. They are also not at all shy about accepting Sales Tax GST/HST collected by these businesses on behalf of the Government. And may I add – they are willing to accept these sales taxes without offering any compensation for this service.
Falling Through the Cracks
Admittedly, these bail-out measures from the Federal Government helped a lot of people through this difficult period, but they did nothing to help home-based businesses. These self-employed entrepreneurs somehow managed to fall through the cracks, as they often do, which means they were just plain out of luck – left to pick up the shattered pieces of their dreams, along with the countless hours, their savings and all the hard work they had invested.
By providing these ‘bail-out’ measures, the Federal Government is banking on these measures to jump-start the economy once the pandemic is under control. Since all these handout-outs are taxable, the government will soon recoup the monies it had paid out. Unfortunately, it may be too late for many small businesses to survive.
Good luck with your business.
© Copyright 2020 – Michael A. Coates – All Rights Reserved