Nearly 70% of small businesses have been disrupted due to construction: CFIB

TORONTO — Nearly 70 per cent of Canadian small businesses say they’ve experienced disruptions in some form, including taking a financial hit, from construction projects within the last five years, a new report from the Canadian Federation of Independent Business shows.

The most frequent issues reported were heavy traffic in the area, noise, dust and debris. Almost half of businesses reported staff and customers had trouble finding their storefront because it was blocked or hidden because of construction, leading to lost sales.

The CFIB report published Tuesday said small business owners reported losing an average of 22 per cent of revenue during the biggest construction period they faced within the past five years.

“This is an especially pressing challenge, when over half (53 per cent) of small business owners across Canada cite lack of demand as an issue for their business,” the report said.

Shoppers have been reining in their spending in general as they grapple with the higher cost of living, compounding problems for businesses struggling with construction outside their door.

Alexandra Dinsmore, communications co-ordinator at the City of Toronto, said the city recognizes the challenges and disruption that local communities face amid ongoing public construction.

“City-led construction is considered an essential service by the Province of Ontario and is necessary municipal work to ensure Toronto’s infrastructure remains safe, in a state of good repair and able to meet Toronto’s needs now and in the future,” said Dinsmore in an emailed response.

While small businesses understand the importance of infrastructure upgrades, many fold before they can reap the benefits of the completed projects, the report said.

Besides losing revenue, public construction adds to the financial burden for already struggling small businesses in other ways.

The report said a median business spent around $10,000 over the past five years on expenses such as repairs and cleaning when construction takes over their street.

To pay for various expenses caused by construction projects, 14 per cent of small business owners dipped into their personal savings, 12 per cent took on debt and six per cent contemplated closing or relocating their business because of the construction.

It also took an emotional toll — especially when there was no clear end date. Twenty-three per cent of business owners said they experienced significant stress due to construction.

Construction-related disruptions lasted for 508 days on average, the report said.

CFIB suggested all levels of government establish comprehensive construction mitigation plans to help small businesses thrive even as construction disrupts their day-to-day business.

Effective strategies require delineation of responsibilities and co-operation across all levels of government, especially with project funding overlaps from multiple government levels. That creates an issue of accountability where no single entity takes responsibility for addressing the negative impacts of construction on local businesses, the report said.

CFIB suggested setting up designated points of contact within each level of government, transparency in communication and comprehensive plans backed by legislation.

A vast majority of small businesses, about 68 per cent, believe they should be compensated by the government when a major construction project disrupts their shop, the report said.

Cities such as Calgary and Montreal already have policies to mitigate construction effects on small businesses.

In Toronto, the municipality has set up grant programs for small businesses, Dinsmore said, such as a transit expansion construction mitigation grant program and a commercial space rehabilitation grant program.

Emily Boston, co-author of the report and senior policy analyst at CFIB, said while businesses can’t do a lot to limit the impact of construction, there are a few things they can do to help keep shoppers coming in the door.

Putting up signs reminding passersby that they’re still open; identifying other places for customers to park while construction is ongoing; and maximizing their online presence/shipping options to help maintain sales could help alleviate some pressures, Boston suggested.

“These suggestions are Band-Aid solutions to problems that require comprehensive construction mitigation plans from governments to be properly addressed,” she said.

“The most impactful step they can take is to raise their concerns with the local or provincial government in charge of the construction project that is impacting them, to encourage governments to adopt compensation policies.”

This report by The Canadian Press was first published Aug. 20, 2024.

Ritika Dubey, The Canadian Press