Canada's Solopreneurs Face Significant Challenges Amid Economic Uncertainty

Canada’s Solopreneurs Face Significant Challenges Amid Economic Uncertainty

A recent survey conducted by EQ Bank highlights the difficulties faced by Canadian solopreneurs as they navigate a tumultuous economic landscape. Conducted among members of the Angus Reid Forum, this national survey underscores the adverse impacts of global trade disputes and economic unpredictability on these independent business owners.

Economic Pressures on Solopreneurs

The survey revealed a startling statistic: 51% of solopreneurs believe that the challenges posed by the current global trade environment are having an impact equal to or greater than the ramifications they faced in the aftermath of the COVID-19 pandemic. Nearly one-third of respondents expressed concern that shifting trade relations, particularly with the U.S., could pose an existential threat to their businesses.

Much like the turmoil faced during the pandemic, these challenges have intensified uncertainties around financial futures. Approximately 24% of respondents worry about their business’s financial health, and a significant 32% have, at some point, considered closing their venture. As the reality of evolving U.S. policies begins to influence trade, many solopreneurs are grappling with increased difficulties in essential business operations such as sourcing raw materials (38%), pricing products (34%), and planning for future growth (30%).

Dan Broten, SVP and Head of EQ Bank, pointed out the growing pressures on solopreneurs, emphasizing their crucial role in Canada's economic framework. As they adapt to new market realities, it is essential for financial institutions to innovate and provide solutions that adequately address their unique challenges.

Feeling Overlooked and Undervalued

Despite the frequent acknowledgment of small businesses as the backbone of the Canadian economy, many solopreneurs feel they do not receive this recognition. A concerning 60% stated they do not feel seen as business owners in the same light as larger firms. This sentiment is exacerbated by the prevalence of misconceptions surrounding solopreneurs, such as assumptions that they can easily take time off or work fewer hours than their traditional employee counterparts.

These misperceptions contribute to the struggle for validation and support, which is often essential for small business success. Many solopreneurs face challenges that range from juggling their limited finances to managing demanding hours while battling the influence of outdated banking tools.

Financial Constraints and Time Management

The financial struggles are reflected in the survey, where over a third of respondents indicated they combine their business and personal savings, while another third either lack savings for emergencies or rely on credit to support their operations. Alarmingly, 27% of solopreneurs reported estimated earnings below the national minimum wage, with figures as low as $9 reported by 18% of respondents. These figures portray a stark reality for many who are trying to carve out a slice of the business world independently.

Time is another scarce resource for solopreneurs. Roughly 40% spend only 10 hours or less weekly on their primary business functions. In contrast, they allocate the same amount of time to accounting and administrative duties, diverting precious time and energy from driving growth. 54% voiced frustrations over high and unexpected banking fees and insufficient advisory support available to their businesses.

Resilience Amid Adversity

In the face of these pressures, nearly 69% of solopreneurs indicated that they would still opt to start their business if given the choice again. This resilience is reflected in the pride associated with being a business owner, with accomplishments such as being their own boss and pursuing their passions highlighted by many respondents.

Cathy Ly, VP of Small Business Banking at EQ Bank, emphasized the gap between the financial tools currently available and the specific needs of solopreneurs. She advocates for an evolution in business banking tools that not only allows solopreneurs to grow their funds but also grants them the time they need to focus on their business.

Recognizing the urgency of the situation, EQ Bank recently launched a Business Banking platform designed to cater to solopreneurs. The offering includes a high-interest, no-monthly-fee business account and upcoming prepaid funds aimed at providing much-needed financial support.

This survey sheds light on a crucial segment of Canada's economy, reflecting the trials and determination inherent in the solopreneur landscape. As they continue to navigate economic uncertainties, the need for greater recognition and support becomes even more critical, positioning solopreneurs as resilient yet vulnerable assets in the fabric of Canada's economic future.