First the pandemic, now inflation: Quebec's small businesses are slammed again
Published Thursday, May 19, 2022 2:28PM EDT Last Updated Thursday, May 19, 2022 2:51PM EDT
Post-pandemic business has been picking up for Dylida Mao, the owner of catering company La Petite Mangue, with once-delayed weddings and other celebrations back on the calendar.
But the entrepreneur hasn't been able to enjoy much of the 2022 busy season because she's stuck handling yet another financial crisis.
"It feels a little bit like it's hard to see the light at the end of the tunnel," Mao said in an interview, blaming inflation for creating a new set of problems.
She's not alone. Many small business owners in Quebec who were already grappling with a severe labour shortage and supply chain issues are now required to pay significantly higher prices for supplies and materials - not to mention gasoline.
It's forcing them to make difficult decisions and sometimes have tough conversations with clients about why they need to charge them more for their services.
According to Statistics Canada, the country's inflation rate has hit a three-decade high of 6.8 per cent – the highest since January 1991.
Overall food costs rose 8.8 per cent compared with a year ago, caused partly by Russia's invasion of Ukraine in late February and poor weather in growing regions.
As an Asian catering service, La Petite Mangue uses a wide variety of ingredients, many of them pricier now.
"For example, a lot of our ingredients are imported, like coconut milk, and rice and whatnot and they are like triple in cost compared to what it used to be," said Mao.
"Gluten-free soya sauce, for example. I used to pay, I don't know, like a fraction of what I paid. Now it's like $30 per little container."
Not only is she shelling out more for staple items, but her vendors also advised her to stock up on the imported goods because there's no telling when they'll receive another shipment.
Local produce is also more expensive, so Mao, who lives in a suburb and has a big backyard, started some small-scale urban farming.
"I start growing certain things myself, like leafy greens, for example, because they're very easy to plant…cucumbers," she said.
But no matter what measures she takes to ease the bottom line, Mao said she's still losing some money, especially since she must honour wedding contracts signed a year ago before prices surged.
"Now we're thinking about incorporating the inflation costs into the wedding [contracts]," she said.
PAIN AT THE GAS PUMPS
While the owner of Campanelli and Sons Landscaping can't grow any of the products they plant on clients' properties, he relates to Mao's pain around prices.
"Conifers have gone up, I would say, a good 40 per cent from pre-pandemic. So, if there was a plant that was $100 two years ago, well, now it's $140, $150," Michael Campanelli said.
Fertilizers have also increased in price, as have seeds, grass seed, in particular, the landscaper explained.
The biggest hit to the bottom line, however, comes from the price of gas.
"So my regular pickup truck, a one-tonne truck, you know, the amount of gas that I put in because I also pull the trailer to pull stock and materials and everything…to fill up is about $235," said Campanelli.
And that only lasts him five days.
"If you're paying more for your workers and you're paying more for your gas, you're paying more for your materials - somebody's got to pay for this, right?"
"I guess the customers are going to have to pay a little bit more money. There's no way of getting out of it," Campanelli concluded.
He acknowledged it might affect business if people decide it's too expensive to continue to spruce up their outdoor space - even with outdoor living encouraged during the ongoing pandemic.
FIXED-PRICE CONTRACTS, A THING OF THE PAST
With the recent increase in gas costs and commodities, some entrepreneurs are still trying to come up with a new business formula – to ensure their company survives financially, and that will also sit well with customers.
Electrician Richard Baptista, owner of Les Entreprises XB Inc. is right in the middle of figuring it all out.
"The burden falls on the client, unfortunately, because, for example, copper has gone through the roof," he said.
And since the price of the material, along with the PVC conduit fittings he uses, can change from week to week, "it's hard to give one price for a project, said Baptista."
So he's decided he will provide clients with estimates but no fixed price "because they have to allow for fluctuations in materials and wires," he said.
That doesn't always sit well with clients of any business, of course, if they have a fixed budget, so some people may decide to delay getting the work done if they're not under undue pressure.
"But the inflation as far as the gas prices, I haven't really had a chance to put that into my hourly rate yet because it was so brutal so fast," Baptista said. So, for now, he's losing money.
And as he and his fellow electricians wait for guidance from their professional order, the Corporation of Master Electricians of Quebec, "we're [the electricians] sort of absorbing that for now," he said.
Baptista said several economic issues are colliding simultaneously, and it is creating a great deal of stress for small and medium businesses.
"Prices are super high…but here's a lot of work going on at the same time. People are putting themselves in debt, like a lot of debt. And then there's no manpower," he said.
It's an uncertain time.
"For me right now, we're keeping our head above water. I have to make price adjustments going forward. How my clients are going to take it or will they accept it - I don't know."
For Mao, inflation and her inability to find young workers to hire means she has to put her dreams on hold.
"Before the pandemic…we were thinking about how we're going to grow," the caterer said, explaining that plans to open a new takeout counter are on the backburner now, causing frustration and concern for the future.
"You can see there's room to grow, but you can't grow," she said, stymied as they are by all the burdens described.
"It's getting better, the pandemic, but in the meantime, the effects that it brought… it's really like, when am I going to get out of this?"