The actions of a new Canadian and American government are finally taking effect, paired with a shift in buyer behavior. Here are 5 events which will undoubtedly impact the Canadian marketplace going into 2018.
1. Re-negotiating the North American Free Trade Agreement (NAFTA) with US, Mexico
Under the Trump administration, NAFTA re-negotiations have been lengthy and vague. One of America’s main priorities is to reduce their trade deficit within the agreement, however this could entail a myriad of changes. Currently, Canada and the US are in a heated debate over the dairy supply management and softwood lumber sector. After the third round of discussion, the three countries still don’t have any major momentum established. However, if the planning is taking too long, the US president may pull out of the trade agreement altogether. The major issue is unpredictability. The best thing a small business can do as of now, is stay updated and understand whether their industry will be directly impacted by negotiations.
2. Canada-European Union Comprehensive Economic and Trade Agreement (CETA) deal with Europe
The purpose of the CETA is to remove 98% (previously, 25%) of tariffs between Canada, the European Union (EU), and its member states. This exposes Canadian businesses to an estimated population of over 510 million. Compared to foreign exporters, Canadians will have access to many advantages such as unified information sharing, policies which allow Canada to self-test goods sent to the EU, and predictable times for transport of goods. If you are a Canadian small business owner, now is a good time to consider expanding to a European market.
3. Liberal tax changes to small business
Although 3 points have been identified by the Trudeau government, we have yet to see concrete rules and policies laid as a foundation for these points. The liberal party is convinced the changes will bring positive outcomes, however, they have faced large criticism from outside parties. Several reports have come to light, showcasing the dangers and benefits of these new tax reforms, but only the future can determine its true effect. For more on the small business tax, please read this article highlighting plan criticisms and unintended effects. We recommend staying up to date and advocating your opinion before the consultation period ends.
4. Increasing minimum wage
Over the past 2 years, Alberta’s minimum wage has been increasing, with a cap set at $15 by October 2018. Ontario is following suit, with plans to gradually shift to $15 by 2019. As a result, the other provinces are feeling untoward pressure to adjust their own hourly wage. Paired with the liberal tax reform, this may cause chaos for incorporated small businesses in Canada. Expect to cut costs, or lay off some workers, as the changes may affect your bottom line.
5. Changing consumer demographics
The baby boomer generation is one of the largest in history, and it’s aging. At the same time, buyer power is shifting towards the millennial market as many are starting their professional careers. Undoubtedly, this generational gap will affect consumer behavior and values. Millennials have had the internet for most of their life (if not all), and as a result, look for greater flexibility in both their lifestyles and purchase decisions. They like to shop local and show brand loyalty, but prefer value and long term quality. With so much information out on the web, small businesses should devote time to understanding marketing concepts and digital advertising, instead of relying solely on word of mouth or foot traffic.
2018 will be a time of opportunity for many small business, but to succeed, you must be aware of Canada’s ever-changing environment. Olympia believes in supporting our clients through education and information, which is why we have thousands of resources surrounding Health Spending Accounts (HSA), a product which benefits over 55,000 small businesses across Canada, every year.
If you are a small business and want to learn more, please read our free guide: