Canada is getting back to normal, but it’s far from business as usual

After several months of COVID, Canadians and organizations transformed by the pandemic are discovering moving backwards may not be the best path forward after all

The relaxing of COVID restrictions and a return to some sense of normalcy is a welcome change for business, consumers, and employees across the country. But the world people are stepping back into will not be the same as it was more than a year ago.

Organizations executed three- to five-year transformation plans in a matter of months. Consumers embraced new habits and preferences. Employees embraced the flexibility and freedom of working from home. These aren’t the sort of changes that can be easily undone or forgotten.

Of course, nobody wants to continue living the way they have throughout the pandemic. But few want to turn back the clock and completely revert to the old ways either.

“The pandemic recovery period is a unique opportunity to reassess, re-evaluate, and reset,” says John Hughes, senior vice-president of Private Enterprise at MNP — one of the largest accounting, tax and business consulting firms in Canada. “Change has been a matter of necessity for the past few months. Now it’s time to approach it as a matter of opportunity.”

Hughes and his team have been helping owner-managers triage the related social and economic impacts to their businesses and find a way forward since the first wave of restrictions in March 2020. Early in the pandemic, they introduced a seven-step process to guide clients through everything from accessing government supports to recovering and restructuring a faltering operation. Now they’re re-imagining this roadmap to navigate yet another phase of significant change.

“We’re keenly focused on scenario planning right now,” says Hughes. “Few businesses have had the luxury of looking several days into the future, let alone several months. We can finally start asking important questions around what’s worked, what needs to change, and how to make the most of this new beginning.”

Risk isn’t going away

Part of that planning needs to consider the possibility another wave of COVID could slow or reverse the recovery process — or an altogether different natural, economic, or competitive disaster may strike in the near future. For many Canadian businesses, the pandemic was the first external factor that truly jeopardized their business. But that doesn’t mean those types of events are rare. Climate events, cyber attacks, and the pace of technological change are just a handful of increasingly evergreen concerns.

Hughes says clients are more receptive than ever to conversations around what can go wrong and how to prepare for situations when strategy and reality don’t align. Developing and implementing a resilience plan is one way to ensure a continuity of operations. So is taking proactive measures to reduce unnecessary costs and ensure revenue streams are as agile and efficient as possible. 

With many organizations opting to keep some sort of hybrid or remote workforce model, internal threats remain a potential area of concern. While fears around whether employee productivity and collaboration have long since subsided, the opportunity for fraud and workplace misconduct are higher in a decentralized workforce.

“The advantages for better health and wellbeing of staff mostly outweigh the risks,” says Hughes. “But owners and managers now need to consider how they’ll monitor potential concerns and respond appropriately.”

He says MNP has a strong multi-disciplinary risk and litigation support team with more than a century of combined law enforcement experience and decades more in public practice. Whether a client faces a legal, regulatory, or reputational issue, they can help ensure a smooth resolution with as little disruption to the business as possible.

Keep the end in mind

Another important factor to consider is that for most Canadian business owners, the business is much more than just a business. It’s a passion, a legacy, and a driving force in their future welfare and retirement goals. Just as financial advisors recommend employees start planning for retirement in their 20s and 30s, MNP urges their private enterprise clients to make succession planning a regular fixture in strategic planning and decision making.

“Succession isn’t just about who’s going to take over the business when an owner retires,” says Eddy Burello, a Senior Tax Partner and Business Advisor in MNP’s Toronto office. “It’s about how an owner is going to realize on the time, energy, and capital she’s put into it over the years so she can retire comfortably and confidently.”

The pandemic has understandably altered many Canadians’ perspectives on retirement. Confronted with the virus threat and its potential long-term health impacts, many are looking to leave the workforce early. For others, the excitement around transforming their business and successfully steering it through a crisis has renewed their passion and made them want to stick around for even longer. But Burello says when the eventual succession will occur is only one part of the equation.

“The owner is certainly the biggest stakeholder in the succession conversation, but they’re far from the only one,” says Burello. “Employees want the stability of knowing their jobs are secure and the business is heading in a good direction long term. Potential investors or acquirers factor these qualities into business valuations. Family members want to know whether they’re being groomed for leadership or how the future of the business may impact their inheritance.”

The number of succession options is greater than ever before, and Burello says if they make sense, strategies like Employee Share Ownership Plans can even help attract and retain engaged employees. Given the increased risk many front-line workers faced, the desire for many to preserve remote working privileges, and an anticipated rise in resignations in the months ahead, now may be a timely moment to have that conversation.

Be deliberate about growth objectives

While some organizations managed to shift business models and capitalize on new markets throughout the pandemic, most focused on surviving. Now that the tide has shifted, it makes sense to start thinking about capital projects, as well as opportunities to increase market share and expand into new markets. The risk, of course, is being blinded by ambition trying to take on too much too soon.

“The next couple of years are going to be frenetic from an investment and mergers and acquisition standpoint,” says Hughes. “Everyone will undoubtedly be aware there may be opportunities to grow and become more profitable, but the dollars have to make sense first and foremost.”

Hughes and his team work closely with a highly skilled team of transaction advisors, valuators, economists, statisticians, and risk specialists to help businesses meet their growth ambitions without becoming over leveraged or biting off more than they can chew. He says the right advisor can help with everything from identifying suitable M&A targets, to finding the right financing at a fair price, and performing comprehensive due diligence to ensure the deal is as advertised.

Even for businesses focused on organic growth, there are still benefits to working with a skilled advisor who can guide financial decision making and improve the bottom line. MNP’s private enterprise team includes a large network of assurance and accounting professionals who provide comprehensive financial reporting and help business owners make data-driven decisions.

“You need reporting that reflects what makes your business unique,” says Hughes. “All data will determine the direction of your business. The right data will steer it to where you want it to go.”

The right tax strategies, too, are critical to help retain as much capital as possible in the business. Amid declining revenues during COVID lockdowns, it was the dollars saved through rigorous tax planning that helped many organizations stay afloat. While the situation hopefully won’t be that dire again, it highlights the potential of a customized and well-structured tax strategy to help businesses save and re-invest in their continued growth and long-term security.

Leverage what you learned throughout the pandemic

Every business that made it through the pandemic has emerged in some way smarter and stronger as a result. Some discovered untapped client bases. Others found new opportunities to celebrate and engage a front-line or decentralized workforce. Many discovered they were far more resourceful, tenacious, and adaptable than they ever gave themselves credit for.

Not every COVID-driven change and adaptation is worth hanging onto. But the mindsets and behaviours that made businesses resilient in the face of this once in a generation disruption almost certainly are.

“The challenge for many owners will be seeing beyond superficial processes and technologies to understand the real drivers of their success,” says Burello. “For example, was it the new website that helped a retailer preserve revenue when their store was closed — or was it their commitment to customer service and the client experience?”

One lesson Hughes, Burello, and MNP’s entire private enterprise team hope persists is the role committed and qualified business advisors can play in a business’ ongoing success.