Construction has led to hard times for thousands of small businesses in past 5 years: CFIB report

August 20, 2024 Canuck

Construction projects have severely disrupted thousands of small businesses in Canada in the past five years, resulting in a drop in sales and revenue, a new report says.

The report by the Canadian Federation of Independent Business, released on Tuesday, says traffic congestion, dust, debris and noise were the most common problems experienced by the majority of small firms due to construction. The CFIB has 97,000 members.

“We’re not asking governments to stop upgrading roads or repairing sewers. Public infrastructure projects are important, but when they drag on for years, it’s difficult for businesses to survive in the meantime,” Emily Boston, senior policy analyst at CFIB and report co-author, said in a news release on Tuesday.

“A large portion of construction costs can be avoided with better planning, execution, and by giving more consideration to the reality of local businesses.”

According to the report, 68 per cent of CFIB members surveyed in May and June said their business operations have been disrupted by local construction projects in the past five years, a 27% increase since 2018.

Forty-nine per cent of respondents said customers and staff had trouble accessing their business or finding parking, 23 per cent reported high levels of stress and 33 per cent said they didn’t receive enough notice.

Average of 508 days of disruptions over 5 years: survey

Twenty-two per cent of businesses surveyed said the disruptions have impacted their operations in a major way. On average, the report said small businesses suffered through 508 days of construction-related disruptions over the past five years.

The report said surveyed businesses reported a loss of 22 per cent of revenue on average during the most significant construction project that affected them in the past five years and spent about $10,000 in extra expenses such as cleaning and repairs.

Matthew Lee, owner of Louie Coffee on King Street West near Dufferin Street, — Matthew Lee, owner of Louie Coffee, says nearby construction makes it hard to predict on any given day how many customers are going to be able to come by. (CBC)

Matthew Lee, owner of Louie Coffee on King Street W. near Dufferin Street, said construction has been going on outside his shop since February as the city replaces a water main and the TTC installs new streetcar tracks. He said it’s hard to predict on any given day how many customers are going to be able to come by.

The project is set to wrap up in November, but Lee says it’s impacted the amount of customers and money he’s able to generate.

“It’s just more disruptive during the weekdays when you have all the construction going on, obviously. It’s about a lot of noise. It’s noticeably worse when it starts to rain. We see big splashes of water coming over the sidewalk, so it’s a little inconvenient for people walking by,” Lee said.

“Sometimes, there’s sudden closures where they had to do sudden excavating or what not, so it closes off the sidewalk. So access is a little bit limited sometimes.”

Nishan Para, owner of Liberty Eats, on Jefferson Avenue near King Street W., said he has been facing similar problems. He said sales have dropped nearly 50 per cent because of construction.

“They move the streetcar to the other side and then people can’t walk in,” he said.

Para said it’s not just about the customers. He said delivery app drivers avoid the area due to congestion caused by the construction.

“We are a takeout business so we mainly depend on the delivery partners app and other stuff,” he said.

Small businesses ‘don’t want to be forgotten’

Julie Kwiecinski, CFIB’s director of provincial affairs for Ontario, said the organization is asking municipalities to create construction mitigation funds to offset impacts of construction on small businesses. She said 304,000 small businesses in Ontario were impacted in some way by construction over the past five years.

“This is a huge issue and it’s only going to increase,” she said. “Small businesses just don’t want to be forgotten in the planning process for these major projects.”

Signage outside Casual Hair Salon indicating a closed sidewalk. — Signage indicating a closed sidewalk is shown here on Eglinton Avenue W. (Ania Bessonov/CBC)

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.

The city 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.

The report recommends that governments:

Establish a compensation program in cases where construction has a moderate to major impact for an extended period on local business revenues and operations.
Implement a “no surprise” rule requiring the municipality to track the condition of its infrastructure and let local businesses know about construction well in advance.
Adopt a comprehensive planning approach involving the “dig once” principle and the timing of projects.
Adopt a bonus and penalty system, especially for the early and late completion of a project.
Designate a business liaison officer with managerial authority for each project.
Clarify responsibilities prior to the start of construction projects.

CFIB surveyed its members on the impact of construction on their business operations between May 16 and June 15. It received answers from 1,240 small businesses in Canada. For comparison purposes, a probability sample with the same number of respondents would have a margin of error of plus or minus 2.8 per cent, 19 times out of 20.

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Canada News

Construction has led to hard times for thousands of small businesses in past 5 years: CFIB report

Average of 508 days of disruptions over 5 years: survey

Small businesses ‘don’t want to be forgotten’

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