Prioritizing profitability key to overcoming challenging economy

Canadian small- and medium-sized enterprises (SMEs) must prioritize their profitability in order to adapt to the changing economic environment and the rising cost of doing business, says the BDC in its study, ‘How to cope with inflation and remain profitable.’ The study says 65% of Canadian companies have felt the negative impact of the rising cost of doing business. “We're not going backwards; the business environment is changing, and small businesses may be tempted to postpone their strategic thinking or certain investments to support their long-term survival,” says Pierre Cléroux, vice-president, research and chief economist at BDC. However, “downsizing and the absence of a mitigation strategy can no longer ensure a company's survival.” The study outlined several strategies SMEs used most often and that have proven most successful; they include using technology to modernize processes, which improves business efficiency and helps revenue growth outpace rising costs; reducing the carbon footprint, which helps with cutting energy costs, improving efficiency, and reaching a wider market; and implementing proactive cost management, which enables regular monitoring of financial performance to optimize costs and revenues. “Nearly 20% of businesses that have implemented at least one winning strategy show above-average growth for their sector. It's clear that investing to support revenue growth is a strategy that delivers results,” says Cléroux.