In a fast-paced world, keeping up-to-date with global economic trends is crucial for small business owners to stay adaptable. Although it can be hard to connect the relationship between major global events and their impact on your small business, having an understanding of world events is important for sustainable business growth and resilience.
Let’s delve into how these big economic trends affect Alberta’s business landscape and how you can approach them strategically.
Political instability and conflicts
The geopolitical landscape is constantly evolving, and tensions between nations can send shockwaves through the global economy and our interconnected world. For Alberta’s business owners, these events can disrupt supply chains, affect export markets and even lead to fluctuations in commodity prices, impacting industries across the province.
Take these examples: Russia’s invasion of Ukraine in 2022 prompted sanctions on Russian energy and high oil prices, and the ongoing conflict between Israel and Hamas poses new risks to an already fragile global economy. High oil prices resulting from conflict can impact Alberta business owners by increasing operational costs, spike oil prices and directly impact transportation expenses for fuel-dependent small businesses, like landscaping companies or courier services.
Trade disputes and disruptions
Consider trade disputes (like the recent Alberta-B.C. wine war) or disruptions (like when a massive container ship got stuck in the Suez Canal for nearly a week in 2021, affecting countless businesses, including domestic transport providers, retailers, supermarkets and manufacturers).
Incidents like these can impact Albertan small businesses by disrupting supply chains and transportation networks, potentially causing delays in receiving goods and increasing shipping costs on affected trade routes.
Inflation and shortages
Inflation—the rise in the prices of goods and services over time—is a global phenomenon with implications at every level of the economy. While moderate inflation is considered healthy for economic growth, rapid inflation can impact businesses by eroding purchasing power, ultimately disrupting business operations. Alberta business owners should monitor cues that may indicate inflationary pressures, such as rising production costs or changes in customer spending habits, and adjust pricing strategies accordingly.
Think about all the factors that have to come together to get food on your plate—or your customer’s. 2023’s sugar shortages impacted markets due to a strike at Western Canada's largest sugar refinery. Shortages like these can lead to increased prices and supply chain disruptions for Alberta businesses reliant on these commodities, directly impacting the cost of goods sold and market competitiveness. It means you might need to adapt your sourcing strategies and pricing models, explore diversification, and create efficiency, improvements and strategic investments.
Climate change
Climate change presents challenges for businesses worldwide, and Alberta is no exception. The province has experienced its share of natural disasters, including wildfires, droughts, floods and air quality warnings. These events can mean overnight change for small business owners, forcing them to reassess priorities, pivot strategies and implement emergency plans. Such sudden shifts demand quick thinking, resourcefulness, and a commitment to community resilience, as businesses play a vital role in supporting recovery efforts and fostering long-term sustainability.
To be strategic long term, it’s best for small businesses to adapt to stricter environmental regulations, changing consumer preferences and the growing demand for renewable energy solutions. Embracing sustainability can also open doors to new markets, attract socially conscious consumers and drive innovation within your local community.
Questions to consider:
- Does your business have a disaster recovery/business continuity plan?
- Can your business stay afloat for more than six months in case a natural disaster shuts it down?
- How does your cash flow forecast look?
Adopting a strategic mindset
In the face of these complex economic trends, adopt a strategic mindset to navigate uncertainty and seize opportunities. Instead of viewing economic events as insurmountable obstacles, you can see them as catalysts for innovation and adaptation.
Strategies to consider:
- Stay informed: Keep informed about economic developments through reputable sources (like CTV News, Global News, CBC News, The Globe and Mail, Statistics Canada, the Canadian Federation of Independent Business, regional economic development offices and Alberta Chambers of Commerce). If you understand the broader context, it allows you to make informed decisions at the local level.
- Diversify your market: Relying solely on domestic markets can leave your business vulnerable. Explore opportunities to diversify your customer base, both geographically and demographically.
For example, if you own a small bakery in Alberta, you might explore opportunities to sell your products online or through partnerships with local cafés. This can help you expand your customer base beyond your immediate vicinity and reduce your reliance on a single market segment. - Embrace sustainability: Incorporate sustainable practices into your business model to future-proof your operations and appeal to environmentally conscious consumers.
An Alberta restaurant could source ingredients from sustainable, nearby farms to reduce its carbon footprint and attract eco-conscious diners. - Build resilience: Develop contingency plans to mitigate the impact of economic disruptions, such as supply chain issues or sudden demand shifts. It’s key to plan for the worst and think through different pricing strategies to be prepared for anything.
For instance, an Alberta manufacturing company might maintain relationships with multiple suppliers, diversify its product line to adapt to fluctuating demand and have backup production facilities in place to minimize the impact of disruptions on its operations. - Collaborate and innovate: Work with other businesses, industry associations and research institutions to share knowledge and resources. Embrace innovation as a means to adapt to changing market conditions and stay ahead of your competition.
An Alberta-based tech startup might collaborate with universities or research institutions to access cutting-edge technology and talent, allowing it to develop innovative products or services that address emerging market needs and maintain a competitive edge.
Recap: Agility is key
For Alberta business owners, understanding and responding to large economic trends is essential for your company to thrive in an increasingly interconnected world. World events create changes in the economy—like global conflict leading to shipping delays or increased supply costs—meaning small businesses like yours have to pivot operations to stay afloat.
By adopting a strategic mindset, embracing sustainability and staying agile in the face of change, you can navigate challenges and capitalize on opportunities to drive long-term growth and resilience in your business.
