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Canada’s population is growing at a record pace driven by the current open-door immigration policy and the need for skilled workers. In 2022, and for the first time in Canadian history, the population grew by over 1 million people to 1,050,110 representing the highest annual population growth rate since 1957.
As the population hit 40 million a couple of months ago, what do all these new Canacians mean for business?
Business owners may see numerous advantages presented by the current population boom, if the opportunities are managed and leveraged effectively. Some of the key benefits that can coincide with a growth in population are;
A growing population means more potential customers. This can lead to increased demand for goods and services, providing businesses with opportunities to increase sales and revenue. A more diverse population can generate opportunities for businesses to increase sales by catering for more diverse tastes, preferences and needs.
A growing market is also typically associated with overall economic growth; a flourishing economy can stimulate business activity, create jobs and drive the increase in consumer spending which can benefit various industries. As the population expands, so does the business ecosystem. This can result in the development of industry clusters, co-op partnerships and networks that benefit businesses through collaboration and resource sharing.
A larger, more diverse population can foster innovation and entrepreneurship as there becomes more opportunity to start businesses with innovative product or service offerings. This can create possibilities for existing businesses for new supplier relationships and partnerships.
A bigger population allows for a business to access a bigger and more diverse talent pool. This may be particularly valuable for businesses looking to hire for specialized roles or expand their workforce significantly.
Population growth often leads to the expansion of markets, creating opportunities for businesses to enter new geographic areas or target different demographics. This can help organizations to diversify, reduce dependence on one market and mitigate risk.
With an increasing customer base, businesses have the potential to sell more and potentially realize higher profits, economies of scale and improved financial performance.
A growing population generally drives the need for more investment into infrastructure development as newcomers want to base themselves in well-connected urban areas. Investments into transportation networks and communications systems can improve business operations and efficiency.
Investors will be more inclined to invest in areas experiencing population growth as it can often signal greater economic potential and return on investment. In this way, businesses may find it easier to raise capital from venture capitalists and angel investors.
With steady population growth across Canada, businesses can often scale more easily as there is a stable and growing stream of potential customers plus qualified employees.
Businesses struggling to attract new employees can put some pre-planning and strategies into place to help them access the bigger pool of skilled newcomers.
Hiring practices and workplace policies that promote diversity and create an inclusive environment for immigrant employees can be a good place to start along with settlement training programs to help new employees integrate and communicate effectively within the workplace and with its clients.
Businesses may also consider a dedicated recruitment strategy to attract immigrant talent which may involve partnering with immigrant organizations, attending relevant job fairs and making cultural connections. Partnerships and sponsorships in the community can also demonstrate commitment to a diverse and inclusive workforce. HR teams must also ensure legal compliance with immigration laws and regulations to avoid any potential issues related to hiring immigrant workers.
By embracing Canada’s immigration and its potential benefits, businesses can enhance their competitiveness while building a more inclusive and diverse workforce.
While immigration policy to make it easier for skilled workers to come to Canada can bring several advantages to businesses, it can also present some challenges. Many of these are the antithesis of the advantages and can happen when immigration and its effects are mis-managed, either by the government or businesses themselves.
Some of these challenges might be…
With a buoyant market, growing along with the population, more businesses and would-be entrepreneurs will likely enter the market to cater to the expanding customer base and take some of the share. This elevated competition may make it more difficult for established businesses to capture share and maintain profitability.
In areas with rapid population growth, businesses may face increased operating costs resulting from such factors as rising rents, labor and more expensive utilities. As demand goes up, so do prices generally and areas become more affluent in turn. It can be a vicious circle, particularly in urban areas as employees looking for affordable housing might not find it easy to come by and finding commercial space for business expansion may also become difficult and more expensive, limiting a business’ ability to grow.
A number of challenges can arise when population growth outweighs the capacity of city infrastructure networks. Transportation networks can become overcrowded before it improves and utilities and public services can be overwhelmed. Inefficient infrastructure can pose logistical challenges for businesses, impacting their supply chain and transportation costs.
Congestion in over-populated city centers can also be an issue, impeding the movement of goods, employees and customers. This can negatively affect business operations and increase delivery times.
Paradoxically, while population growth can provide a larger labor pool, it may also lead to talent shortages in certain industries or regions, particularly if the growth is uneven.
Population growth often brings about cultural and demographic shifts that change a market landscape completely. Businesses may need to adapt to changing consumer preferences to remain relevant and competitive.
Excessive strain on public services such as healthcare and education can stretch government budgets. This may indirectly impact businesses through increased taxation or changes in public spending. There can also be additional environmental stress to consider. Rapid population growth can further harm the environment and this can lead to stricter environmental regulations around congestion, pollution and urban development, potentially increasing compliance costs for certain industries.
Current immigration policy is to welcome more newcomers than ever before to Canada, which can only be a good thing for economic growth. There are, however, some concerns that this policy is not being managed properly by the government in terms of providing for the broader needs of both new and existing Canadian residents.
One such concern is around the mismatch between target immigration levels and housing policy. Toronto Regional Real Estate Board (TRREB) CEO John DiMichele stated in a July Market Watch report…
“We continue to suffer from a misalignment in public policy as it relates to housing. The federal government is targeting record levels of immigration for the foreseeable future, but we have seen very little tangible progress in creating more ownership and rental housing to accommodate this growth. Population growth is imperative for economic development; however, this growth will be unsustainable if people can’t find an affordable place to live. All three levels of government need to be on the same page to fix this problem.”
If housing affordability and public services such as healthcare and education can’t keep pace with newcomers’ demands, then businesses may start to see some of the negative aspects of immigration materialize in their organizations.
Population growth therefore, is neither inherently good nor bad for business. It presents all kinds of opportunities and challenges and the impact on any given business will vary depending on factors such as macro and micro-economic policy, business location, industry, competitive landscape and the ability of the business to adapt to changing conditions. Successful businesses will be those that can capitalize on the advantages of population growth while managing the associated challenges and also keeping a close eye on constantly changing trends.
The Canadian economy is a unique place to do business right now with a growing customer base expending many business opportunities but the possibility that we’re only just starting to see a wider slowdown in economic growth. You need to know when and how best to capitalize on opportunities to expand as and when they happen. This may be through adding to your workforce, expanding into new markets, diversifying products or services or simply having enough liquidity to take on new clients whilst meeting regular obligations.
Sallyport is working with many business owners who are leveraging opportunities to expand their businesses in a changing climate. Reach out to our team to learn about our non-dilutive tailored financial solutions and how they may help your business grow as Canada grows.
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