SMEs raised prices by more than 10 percent in 2022 to offset costs, survey finds

Almost a third of Canadian small business owners raised prices by more than 10 per cent in 2022 to offset rising costs, a survey found — and the trend is continuing this year.

The survey by Ownr, a small business and legal management platform backed and operated by RBCx, found that so far in 2023, more than 23 per cent of small business owners have raised prices by more than 10 per cent.

“The two major concerns for entrepreneurs right now are both cash flow issues and then the backdrop of inflation,” said Derek Hopfner, chief revenue officer at Ownr.

Inflation has been moderating from last year’s highs, but remains elevated, with a reading of 4.3 per cent in March. Meanwhile, the Bank of Canada is holding interest rates high in its bid to fight inflation.

Some of the other pressures most acutely facing small firms right now are labour supply and cost, borrowing costs and supply chain issues, according to the Canadian Federation of Independent Business’ monthly Business Barometer index report.

Though it’s a difficult decision for a small-business owner to make, Hopfner said eventually entrepreneurs have to translate those concerns into higher prices.

“There is this kind of balance between what makes sense from a margin perspective as a business owner, and then making sure that you’re able to attract customers as well,” he said.

Hopfner said he’s seeing more people start businesses as a reaction to economic uncertainty so they can make additional income.

“It’s really interesting to see both if you’re operating the business already, how you react to (inflation), but what you might do if you’re not operating a business yet, and how you might choose entrepreneurship as a path for supplementary income,” he said.

Almost a quarter of the small business owners surveyed said they started their business as a way to make additional revenue, a number Ownr said is increasing from previous surveys.