As we navigate the shifting economic landscape, understanding the key trends shaping our future is invaluable—especially for small and micro businesses. Along with some of our local partners, the Oshawa Chamber recently presented a breakfast keynote from BDC’s Chief Economist, Pierre Cléroux, who shared his expert analysis on Canada’s economic outlook and how businesses can best prepare.
Spoiler alert: the outlook was very encouraging.
With a strong emphasis on positive growth cycles and the strategic role of technology, Cléroux’s message was both hopeful and practical. For small business owners, it’s time to get ready for a “new and positive economic cycle” and leave the economic “roller coaster” behind.
Key Takeaways from the Economic Outlook
A Brighter Future for Canada’s Economy
According to Cléroux, the Canadian economy is on the cusp of improvement. Following a period of economic turbulence marked by high inflation, rising interest rates, and unprecedented adjustments, Cléroux highlighted that the Canadian economy is stabilizing, with growth expected to pick up significantly by 2025. Despite a lingering impact from previous monetary tightening, which led to increased interest payments, these measures have successfully brought inflation under control, inching closer to the Bank of Canada’s 2% target.
For small businesses, Cléroux’s forecast suggests that now is a crucial moment to prepare for future growth. As monetary policies gradually shift, the Canadian economic environment is expected to become more favourable, with projections indicating enhanced credit availability and reduced financial strain in the years ahead.
Ontario’s Unique Economic Position
Ontario, one of Canada’s economic powerhouses, also stands to benefit from the economic recovery but faces some unique challenges. While Cléroux underscored Ontario’s economic resilience—demonstrated by robust employment rates and continued investment in the housing and automotive sectors—he also pointed out high household debt as a potential drag on growth.
Ontario’s economy, according to Cléroux, will experience a gradual uptick. With significant investments in green automotive projects and a continuously growing population, Ontario’s job market is becoming more dynamic, especially in sectors like technology and construction. For local small businesses, this presents both opportunities and challenges. Businesses in Ontario are well-positioned to capitalize on growth in these key sectors, but they may also face increased competition as larger investments drive up local demand for labor and resources.
Shifts in Consumer Behaviour and Market Preferences
One of the most notable insights from Cléroux’s presentation was the evolving preferences of Canadian consumers. Today, customers are more discerning than ever. Many are willing to pay extra for local products and eco-friendly options, with nearly 92% of major buyers requiring suppliers to disclose at least one criterion related to environmental, social, and governance (ESG) practices.
For small businesses, this shift is significant. By aligning with consumer values, such as sustainability and local sourcing, small and micro businesses can not only meet customer expectations but also build loyalty and brand value in an increasingly competitive market.
The Labour Market and Future Workforce Challenges
Labour shortages, a familiar issue for many businesses, are expected to persist and perhaps even increase. Cléroux anticipates that as the Canadian economy strengthens, the demand for skilled labor will increase, especially in Ontario. This could mean more job openings and potentially higher wages as businesses compete for talent.
For small and micro businesses, these labour market dynamics can be challenging. With fewer resources than larger corporations, small businesses may find it harder to attract and retain qualified employees. To overcome these challenges, Cléroux emphasized the need to develop a robust “people strategy” that considers diverse hiring practices, effective employee retention, and clear career development opportunities. Expanding your hiring pool and investing in workforce development could be key moves to navigating the competitive landscape of 2025 and beyond.
Why Technology Investment is Essential
If there’s one takeaway that every small business owner should remember from Cléroux’s presentation, it’s the importance of investing in technology. With nearly 66% of small and medium-sized enterprises (SMEs) already utilizing artificial intelligence (AI) and experiencing benefits in efficiency and time savings, Cléroux identified technology adoption as a “critical factor” for staying competitive. He highlighted how strategic investments in automation and digital tools can create leverage and improve operational capacity.
In Cléroux’s words, “investment in technology that creates leverage” will be a game-changer for small and micro businesses. By adopting tools that streamline processes, reduce manual labor, and enable more efficient operations, businesses can increase productivity without requiring significant expansion in workforce size—a key advantage in the face of ongoing labour shortages.
Technology’s Role in Addressing High Costs
The high cost of doing business remains a significant barrier for small businesses across Canada. Although inflation has slowed, Cléroux cautioned that elevated costs will continue to impact businesses in the near term. Technology, however, offers a path to mitigate these pressures by enabling cost efficiencies. Automation tools, AI-driven customer service solutions, and digital marketing platforms are just a few examples of how technology can help businesses reduce overhead, minimize manual tasks, and serve customers more effectively.
How to Prepare for 2025 and Beyond
With economic stability on the horizon and a roadmap for growth, now is the time for small and micro businesses to take action. Here are several practical steps, based on Cléroux’s insights, to set your business up for success:
- Assess Your Technology Needs: Consider which areas of your business could benefit most from technology. This might include automating inventory management, implementing a customer relationship management (CRM) system, or investing in an e-commerce platform if you’re not already online.
- Invest in Workforce Development: Develop strategies to retain existing talent and attract new employees, such as flexible work policies, ongoing training, and clear career progression paths. As the labour market tightens, businesses that invest in their people will have a competitive edge.
- Focus on Sustainability and Local Sourcing: Align with consumer preferences by sourcing local, sustainable materials and highlighting these choices in your marketing. This will help you appeal to customers who value ethical and environmentally friendly products.
- Prepare for Cost Challenges: While costs may remain high, look for ways to streamline expenses and boost efficiency through technology and automation. For example, digital accounting tools can simplify budgeting and help manage your financials with greater accuracy.
- Stay Informed: Subscribe to BDC’s monthly economic newsletter and other trusted sources of market insights. Staying updated on economic shifts can help you make timely, well-informed business decisions.
Looking Ahead: A Positive Cycle of Growth and Innovation
Cléroux’s optimistic outlook underscores a critical opportunity for small businesses. While we’re moving away from the economic roller coaster, the journey ahead will still require careful planning, adaptability, and a forward-thinking approach. By investing in technology, adapting to changing consumer expectations, and preparing for a competitive job market, small businesses can lay the foundation for long-term success.
The Canadian economy is poised for growth, and with the right strategies, small and micro businesses can capitalize on this new cycle. Embrace the future with confidence, and remember: while challenges remain, the opportunities are abundant for those ready to innovate, adapt, and grow.
To view Pierre’s slide presentation from the event, click below:
