Most small businesses have no plan to deal with the impact of a falling loonie on their bottom line and are instead taking ad hoc steps like reducing costs or altering prices, according to a new poll by the Canadian Imperial Bank of Commerce (CIBC).
A poll of 500 businesses by CIBC found 65 per cent had no plan to deal with a lower Canadian dollar even though more than one-third were worried about the impact of a lower currency.
“We’ve had such a consistently strong dollar over the last seven or eight years that…people started to run their business in way that they forgot about that impact,” said Shelley Swanlund, vice-president of business banking and head of small business at CIBC. “As they (now) see that impact quarter over quarter, they’re starting to have a realization of the implications.”
Importers are the most likely business owners to be concerned (86 per cent) given the potential for higher costs if the loonie drops relative to the U.S. dollar, the survey found, while 53 per cent of manufacturing companies and 44 per cent of wholesale and retail businesses were also worried.
On regional basis, business owners in Manitoba and Saskatchewan were the most worried, while those in Atlantic Canada described themselves as the most unprepared.
The Canadian dollar has been trending upward recently after trading below 89 cents US in late March, closing at 91.56 cents US on April 8 – a figure well below the 2014 high of 93.99 cents US on January 3. The currency hasn’t seen parity with the U.S. dollar since February 2013.
The poll was conducted online by polling firm Leger from February 12 to 19, among a representative sample of English- and French-speaking business owners or decision-makers in Canadian companies with 500 employees or less.